Transaction revenue reached a record high, and it's hard to hide the cost pressure, and the operating expenses of major Wall Street banks have generally increased

The Zhitong Finance App learned that due to increased market fluctuations and strong customer transaction demand, the trading business of large Wall Street banks generally reached a record high in the second quarter. However, at the same time as revenue has increased dramatically, the increase in employee compensation, benefits, and business investment has also boosted operating costs, becoming a common pressure faced by many banks.

Jeremy Barnum, chief financial officer of JPMorgan Chase (JPM.US), said that strong trading business performance helped the bank get off to a good start in the first half of the year. At the same time, expenses such as employee remuneration increased, but such cost increases were “positive” and reflected normal investment brought about by business growth.

However, J.P. Morgan still raised its annual expenses forecast to about US$107.5 billion, higher than the forecast released by CEO Jamie Dimon earlier this year.

Citigroup (C.US) also said that the increase in costs in the second quarter was mainly driven by increased employee compensation and welfare expenses. The company's total expenses for the quarter increased nearly 5% year over year, reaching US$14.2 billion.

Bank of America (BAC.US) non-interest expenses for the second quarter increased 8% year over year to $18.6 billion, higher than analysts' estimates of $18.35 billion. The company stated in its performance materials that the increase in expenses was due in part to costs associated with increased revenue, and also reflected its continued increase in investment in the workforce, brand building and technology.

Bank of America Chief Financial Officer Alastair Borthwick said during the performance call that future expense levels will mainly depend on revenue performance. “If revenue does not reach current levels, expenses will naturally fall; if revenue can be maintained at current levels, then the current cost structure is the expenses required to support the company's operations.”

Goldman Sachs (GS.US) has also failed to avoid the pressure of rising costs. Although the company's second-quarter stock trading revenue reached a record high of US$7.42 billion, operating expenses increased 26% year-on-year to US$11.67 billion during the same period.

Overall, the market remains optimistic about the profit prospects of large banks, driven by record performance in the trading business. On Tuesday, US bank stocks generally rose, with Goldman Sachs leading the KBW Bank Index. Against the backdrop of continued market fluctuations and active customer transactions, the trading business is still expected to continue to contribute considerable revenue to large banks. However, as remuneration incentives, technology investment, and talent competition continue to intensify, cost control capabilities will become an important focus for investors in the future.