For Wall Street, the fees the bank earned providing investment banking services, like advising companies on mergers and underwriting initial public offerings, fell sharply. They were 54 percent lower than the same period last year, contributing to a 26 percent drop in profit for its Wall Street business overall. But the quick and substantial swings in the prices of stocks, bonds and other financial products caused the bank’s revenue to rise 15 percent from last year in its trading businesses, which thrive during times of volatility.
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JPMorgan also announced that it was suspending buybacks of its stock — a way of distributing extra cash to shareholders — to more quickly build reserves of capital to meet reconfigured requirements set by regulators. Mr. Dimon told reporters that without the new regulatory requirements, the bank would “probably” still be buying back stock.
Profit at Morgan Stanley also missed analyst expectations. The investment bank and investment firm’s earnings fell nearly 30 percent in the second quarter from the same period a year ago, to $2.4 billion. The recent market turmoil halted deals and caused fees from stock and bond offerings to plunge.
Nonetheless, the bank, unlike JPMorgan, announced a new stock buyback, saying it planned to repurchase as much as $20 billion of the company’s shares, though the bank didn’t give a time frame for when the purchases would be made. Buybacks have raised issues with regulators in the past, who worry in times of turmoil that using cash to buy shares depletes the capital banks have to cover loan losses.
On a conference call with analysts, James Gorman, Morgan Stanley’s chief executive, got pushback from some analysts on the buyback plan. Mike Mayo, who covers banks for Wells Fargo, asked whether it was time for the bank to shift to “Plan B,” given the worsening economic outlook.
“It’s a challenging market, but I think it is important to say that it’s not 2008 complicated.” Mr. Gorman said.
He suggested that the bank would be more conservative in its plans for expansion. “We are in a bit of an uncertain world,” he said. “I don’t think this is the time to be overly aggressive.”
Isabella Simonetti contributed reporting.
