• JPMorgan CFO Jeremy Barnum said the investment banking pipeline remains robust, with deals delayed rather than canceled.
  • Barnum warned buyers and sellers may temporarily diverge on valuations as markets adjust.
  • The bank's Q3 profit rose to $15.3 billion, but earnings and revenue missed analyst estimates.

JPMorgan Chase (JPM)'s investment banking pipeline remains robust even as deal execution slowed in the second half of September, according to CFO Jeremy Barnum. He emphasized that transactions are being delayed rather than canceled, and that buyers and sellers may temporarily move further apart on valuations as markets adjust. The message from the largest U.S. bank by assets is one of resilience, not uninterrupted growth: prospective deals remain available, but market volatility and pricing disagreements are slowing execution.

The third-quarter results, reported Friday, illustrate that distinction. Investment banking fees rose 14% from a year earlier but fell 8% from a particularly strong second quarter. Net income came in at approximately $15.3 billion, or $5.57 per share, up from $14.4 billion a year earlier. That fell short of the $5.90 per share analysts had expected, and revenue of roughly $50.2 billion, while up 8%, also missed consensus. Investors focused on the slowing momentum, sending shares down about 3% in premarket trading, according to Reuters (TRI).

"What institutional investors like us are really focused on is regulatory stability," Barnum said, adding that the pipeline remains healthy but that closing deals is taking longer. He noted that buyers and sellers are temporarily moving apart on valuations, a dynamic that can delay transactions without killing them.

The slowdown follows a powerful first half for JPMorgan's investment bank. Fees rose 28% year over year in the first quarter and 30% in the second, when they reached $3.3 billion. Against that unusually strong comparison, the sequential decline in the third quarter is less surprising but still important for the growth outlook. Co-president Doug Petno had indicated in September that investment banking fees and trading revenue could rise by percentages in the mid-to-high teens; the eventual 14% fee increase landed near but below that characterization.

Other parts of the bank provided offsets. Markets revenue climbed 15% year over year to $10.3 billion, helped by volatility tied to uncertainty over global interest rates and higher energy prices. Net interest income excluding markets rose 6% to $24.7 billion, with average loans up 10%, reflecting healthy consumer and business lending. Underlying U.S. consumer spending remains strong, Barnum said, though he acknowledged that higher financing costs are a counterweight for some borrowers.

The broader industry backdrop is mixed. Global investment banking revenue fell 6.6% year over year to $27.2 billion in the third quarter, according to CNBC (VSNT), reflecting declines in completed mergers and debt issuance. JPMorgan's own fees rose 14%, suggesting company strength amid uneven conditions. The IPO market has become more selective, analysts said, but not shut, leaving room for postponed offerings to return if conditions stabilize.

"We have a constant balance with the banks, which really we consider our partners and not only our binary competitors," said one industry executive, speaking about private credit partnerships, though the comment was not directly related to JPMorgan's results. "It's much more of a convergence between the two solutions." The comment reflects broader trends in lending markets, where non-bank lenders are increasingly partnering with traditional banks to deploy capital.

Monetary policy remains the most immediate swing factor. The Federal Reserve raised interest rates in September, and higher bond yields threaten to increase borrowing costs and tighten financing conditions. That creates a risk for both loan demand and deal execution. JPMorgan has also flagged geopolitical tensions, wars, energy-price volatility and trade uncertainty as significant risks for its global clients.

Expenses rose 12% against revenue growth of 8%, another area investors are watching. The bank's efficiency efforts are ongoing, but the gap highlights the challenge of managing costs while investing in technology and talent.

Peer results due later Friday and Monday from Goldman Sachs (GS), Citigroup (C), Wells Fargo (WFC) and Morgan Stanley (MS) will provide further evidence on whether the slowdown is industrywide. Bank of America (BAC) has already indicated it expects roughly a 10% decline in investment banking fees, contrasting with JPMorgan's anticipated growth.

JPMorgan declined to comment beyond Barnum's remarks. A spokesperson did not respond to a request for additional comment on the valuation gap or the timing of delayed deals.

Correction: An earlier version of this article misstated the sequential change in investment banking fees. They fell 8% from the second quarter, not 8% from a year earlier.