JPMorgan Q4 2025: Trading Soars as Investment Banking Fees Drop Amid Rising Costs

ulli Overview of Q4 Trendsali JPMorgan closed out 2025 with modest revenue growth and solid trading performance, but investment banking underperformed expectations—and overall profitability was impacted by non-recurring charges and rising expenses.li Markets as the Growth Engineali Markets revenue up 17% YoY ($8-9B range), with equities revenue up a striking 40%, underscores how JPM has leaned into volatility and flow in its trading businesses. Fixed income also helped, although more modestly (+7%). These gains helped offset weakness elsewhere.li Weakness in Investment Banking Feesali Investment banking fees fell 5% YoY despite full-year gains; advisory fees were down 3%, equity capital markets revenue dropped about 16%, while debt capital markets revenue edged down 2%. The decline came despite expectations (at a December investor conference) for investment banking fees to post a “low single-digit” gain [primary article], indicating that deal flow underwhelmed even relative to guidance.li One-time Charge & Expense Pressuresali The $2.2B reserve for taking over the Apple Card portfolio from Goldman Sachs hit Q4 results, reducing EPS by ~$0.60. Operating expenses rose, including compensation costs up 6% YoY in the commercial & investment bank, pushing the overhead ratio to ~51-52% managed. These pressures reduce margin levers even in strong revenue periods.li Strategic Moves & Capital Strengthali JPM continues to invest in growth and advisory: initiating a massive $1.5 trillion security & resiliency initiative (US and UK), and launching advisory services led by Liz Myers focusing on AI, geopolitics, sustainability. Meanwhile capital remains strong, balance sheet solid, with average loans up 9%, deposits up ~6%, AUM up 18%, and CET1 ratios stable. Expected net interest income for 2026 is ~$103B, showing confidence in the core banking franchise.ulli Strategic Implicationsali The divergence between the booming markets business and lagging investment banking fees signals a potential shift in JPM’s earnings profile toward revenue driven by volatility and trading flow rather than fee-based dealmaking. That could raise earnings volatility and risk exposure in down-market periods.ali Expense discipline will be critical in 2026: with comp and other costs rising, leveraging growth without margin erosion requires tightening overhead and ensuring high returns from growth investments (like Apple Card and advisory services).ali Regulatory and policy risks loom: caps on credit card interest rates, political pressure on regulatory bodies (e.g., the Fed), and geopolitical complexity could all affect both banking and markets operations.ali Open Questionsali What are the normalized loss parameters for the Apple Card book, and how will it contribute to earnings over time? How sustainable is elevated markets revenue if volatility recedes? What steps will JPM take to close the gap in investment banking against rivals? And how will rising expenses, particularly in compensation and front-office, be managed if base transaction volumes remain soft?