All eyes and ears will be on Jamie Dimon at 8:30am in New York on Friday. After a tumultuous week in the markets, what he says on JP Morgan’s first-quarter results call with analysts will set the tone for the forthcoming US banks results season.

What the great man says about prospects for his bank – and the read across to others – will be watched like never before. Not only is Dimon the most candid and outspoken of his peers, he bears the scars of successfully navigating the global financial and Covid-19 crises.

The investment banking industry is not at the heart of the current turmoil. Nonetheless, following a period of huge share price outperformance, US and European bank stocks fell some 15% in the aftermath of US president Donald Trump’s “liberation day” announcement on April 2. They staged a recovery on Wednesday when Trump “paused” additional tariffs for 90 days beyond the flat rate of 10% for every country apart from China, which is now subject to 104% 125% 145% tariffs, and the 25% rate for all aluminium, steel and cars entering the US. JP Morgan’s shares, for instance, fell more than 14% between April 2 and April 4 before recovering most of that lost ground.

The difficulty Dimon and his peers will have, is that expectations were high earlier in the year and budgets will reflect that. Bankers were giddy about the prospect of a recovery in dealflow owing to the animal spirits supposedly about to be released by the Trump administration’s policies.

And yet not only has ECM and M&A got off to a quiet start to the year, the global stock market selloff over the past week and heightened policy uncertainty is likely to keep the window closed on significant deals – perhaps even until the US Labor Day holiday on September 1. Trump may blink again, but it’s still hardly a conducive environment for dealmaking.

The one bright spot for investment bankers in 2025 has been DCM, but with interest rates not making a sustained push lower and credit spreads rising, conditions don’t look great for issuance.

A surprise positive this year has been the much-commoditised equity trading business line, but we are seeing a trend of market share concentrated with a few larger US firms and the losses faced by investors likely to hit activity levels down the line unless the recovery in markets proves sustainable.

The macro trading business is expected to be doing well even if more balance sheet-heavy credit and securitised products are likely to see slowing activity, losses on inventory and lower structured financing business. Jefferies recently reported a decline in fixed-income trading revenues for its December to February quarter.

So what will senior investment bankers be focusing on? Banks love spending money on management consultants and I am sure they will advise focusing on the three Cs: costs, capital and clients.

Let's start with costs. Investment banks had already started to take cost action, with a dramatic shrinking of the investment bank by HSBC, Deutsche Bank acknowledging its need to keep a lid on costs and US banks like Morgan Stanley and Goldman Sachs announcing rounds of headcount cuts.

The profitability of investment banking divisions had lagged other business lines such as retail banking and payments. Competition from boutiques has driven up compensation ratios of advisory franchises, while competition for talent from hedge funds and non-bank market-makers, as well as the fight for market share, has led to compensation pressures in markets businesses.

Cost action takes time to feed through given the costs of restructurings. Cost bases of investment banks are more fixed than during earlier crises, given that a high proportion of compensation is base salaries and allowances, growing IT costs needed to keep electronic platforms going and the buildup of a large risk and compliance civil service. Shareholders will now be expecting bank CEOs to start making more meaningful headcount reductions.

In an interview with Fox News on Wednesday, Dimon appeared to acknowledge those pressures. He said JP Morgan had become complacent in recent years and is now tackling bureaucracy and applying some headcount controls.

Second, capital is now scarcer than ever. It is the most valuable commodity investment banks have in these markets. And linked to capital is another C: collateral.

A defining characteristic of the firms that took smaller losses during the financial crisis was proactive risk management, whether it was JP Morgan pulling credit lines with counterparties and clients or Goldman putting on more effective hedges than its peers.

Blackstone CEO Stephen Schwarzman tells the story of how during the financial crisis its largest banker, JP Morgan, pulled half its credit lines while Citigroup kept all their credit lines in place. And this was under the direct instructions of Dimon who went above the heads of his rainmaker relationship bankers. When Schwarzman complained, Dimon said JP Morgan was pulling all their credit lines with poor counterparties and Blackstone was therefore one of the lucky ones.

Banks are well capitalised: there are no signs of huge trading losses and they carry much less inventory than they did going into previous periods of turmoil, although over one-third of equities revenues come from prime brokerage units (ie, from hedge funds) and a fast-growing portion of fixed-income markets revenues comes from financing structured and private credit.

Margin calls were being frantically made by banks across the hedge fund industry in recent days. Leverage at pod shop hedge funds has expanded significantly in recent years. The collapse of Archegos Capital Management illustrated the pain that banks can face from the implosion of a leveraged player.

Which brings me to clients. In these tougher conditions, investment banks have the balancing act between focusing on costs and capital but seeing increased demand from clients for actionable ideas, service levels and funding.

When all your highest paying leveraged clients are heading to the exit at the same time, who you prioritise, when and why can shape those relationships for years to come.

Investment bankers love to chase market share and hate to be the firm to shrink first. But the new paradigm requires a more disciplined approach to costs, capital and clients. Navigating tough markets can be defining moments for banking franchises.

Rupak Ghose is a former financials research analyst

Source: IFR