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Goldman Sachs & JPMorgan are excited about 2024, but don't hold your breath for hiring

If you're looking for some cheerful news today, away from the latest cuts at Citi, there's always the UBS Financial Services conference where people like Goldman Sachs' CEO David Solomon and JPMorgan CFO Jeremy Barnum have been talking about the promise of resurgent revenues in 2024. 

Both men said that 2024 is an improvement on 2023, but Barnum offered more in the way of specifics. In the first quarter, he said JPMorgan's investment banking revenues are expected to be up in "mid-teens" percentage terms, both sequentially and year-on-year. JPMorgan markets revenues are also likely to be up sequentially, said Barnum, although they're likely to be down five to 10 percent on last year's strong first quarter. In investment banking, Barnum described M&A revenues as "encouraging" amidst geopolitical uncertainty, debt capital markets (DCM) revenues as benefiting from refinancing and equity capital markets (ECM) revenues as constrained by last year's weak IPOs.

For his part, Solomon continued to beat the drum for his fond belief that banking revenues will revert to their long term norms, and said that the signs so far in 2024 are promising, although the mean reversion hasn't happened yet. 

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Solomon and Barnum's positivity follows a report yesterday from Coalition Greenwich stating that January 2024 was a bumper month for US corporate bonds, with new issuance up 34% and the average daily notional traded volume (ADNV) at its highest level ever. 

When and whether resurgent trading volumes and senior executives' optimism will lead to hiring is another matter, though. One senior trading headhunter in New York described the current hiring environment as "tepid" and said he's waiting to see what occurs. Another said banks are hesitant about hiring while they're still making cuts. "They need to see that activity can be sustained."

Solomon also indicated why it is banks aren't rushing to add headcount. Goldman is right-sized for 10-year average investment banking revenues: "The firm is levered to a certain revenue expectation," he said. When banking revenues return to the 10-year average, Goldman will have "billions of dollars of upside" from the revenue normalization. However, revenues haven't normalized yet and so those benefits are not yet being reaped. 

Less promisingly, Bank of Montreal today announced its revenues for its fiscal first quarter of 2021. Its markets revenues fell 13% year-on-year in the quarter, while its banking revenues rose 5%. BMO cut 21 people from its investment bank over the period. 

Headcount isn't rising yet. 

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Photo by YingYi Dai on Unsplash

AUTHORSarah Butcher Global Editor

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