JPMorgan Turns Bullish on Future of Global Banks

Four years after questioning whether global investment banks would survive the regulatory scrutiny unleashed after the financial crisis, JPMorgan Chase & Co. analysts are now singing a different tune.

Investment banks are “in better shape and better managed than ever, especially in the U.S.,” analysts led by Kian Abouhossein wrote in a note to clients Monday. “Global investment banks have made excellent progress in reducing their cost base and continue to remain focused on creating positive operating leverage.”

Firms including Goldman Sachs Group Inc. and Morgan Stanley are at the top of JPMorgan’s investment-banking pecking order, followed by Credit Suisse Group AG, UBS Group AG and Barclays Plc.

U.S. investment banks are “much better positioned” compared with European and Japanese peers, the analysts said, citing progress on cost cutting and the potential for a relaxation of regulation in the U.S. JPMorgan wasn’t included in the analysis.

Global investment banks spent the decade since the financial crisis working to meet higher capital requirements and improving compliance and risk management functions, which have crimped revenue and caused them to shrink headcount.

Following a populist wave in countries around the world, investors are now betting the banks are poised to benefit from less stringent regulations and, in the U.S., an improved economic environment.