Expansion push to help JP Morgan double its Middle East revenue by 2030

US bank's business in region has grown 10 per cent annually on average since 2020, Emea chief executive Filippo Gori says

Filippo Gori says the Middle East is the fastest growing market within the bank’s broader Emea region. Pawan Singh for The National

Middle East revenue for JP Morgan Chase has almost doubled in the past five years and the biggest US lender expects to grow it by another 50 per cent at least by the end of the decade, the bank’s Europe, Middle East and Africa chief executive has said.

With about 10 per cent yearly growth from 2020 until the end of last year, the Middle East is the fastest growing market within the bank’s broader Emea business, Filippo Gori, who is also the co-head of Global Banking at JP Morgan, told The National in Dubai. The wider Emea was a key contributor to JP Morgan Group’s total global revenue of $180 billion last year.

“From 2020 to 2024, it has grown substantially … faster than the rest of the region,” Mr Gori said. “What I can tell you is that, over the next five years, we believe that the revenues will grow another 50 per cent from here, so the cumulative growth over a decade would definitely be of more than doubling the revenues.”

The lender, which has been part of some of the biggest public floats, debt market and mergers and acquisitions deals in the Middle East over the past five years, has grown above the region’s economic expansion rate and gained market share.

JP Morgan Chase corporate headquarters in New York. Reuters

JP Morgan is convinced of the longer-term growth prospects of the region, which Mr Gori said is a major beneficiary of capital movement in the Global South.

Geopolitical headwinds and short-term macroeconomic turbulence have no bearing on JP Morgan’s commitment to the region, where it has been operating for almost nine decades.

“So, we don't make decisions based on macroeconomic factors that could impact things in the next two years, three years, five years. Clearly, you always want to have a view around that, the headwinds that we could be facing,” Mr Gori said.

“But if we believe the narrative, and we do believe the narrative that this region is going to be one of the winners of the Global South and relocation of capital, then you just invest.”

Filippo Gori, who is also co-head of Global Banking at JP Morgan says the lender is committed to expanding its operations in the Middle East. Pawan Singh for The National

Expansion drive

All lines of JP Morgan's business, whether banking and markets, or asset and wealth management, have their separate plans for growth and investments in the region.

Payments as a product is also becoming an increasingly important part of the growth strategy in this part of the world, Mr Gori said.

“You enter a country, or invest in a region, you're there forever,” he said. “And what we're doing here is that we're investing for the next 20 to 25 years.”

International financial institutions, regional banks and global asset managers have either expanded their operations or set up new offices in the Gulf region in the past few years. They aim to attract more business from sovereign wealth funds, family offices, wealthy individuals and large institutional clients.

The growing financing needs of Gulf nations to fund their respective economic diversification drives have also resulted in the expansion in corporate banking operations.

The sustained momentum in regional initial public offerings and a robust rise in the debt capital market activity have supported the market. With the rapid rise of personal wealth, boosting the number of wealth managers has also been a primary focus for asset management companies in recent years.

JP Morgan plans to add more than 100 staff across the Middle East, Mary Callahan Erdoes, chief executive of the firm’s asset and wealth management, said earlier this month. The move will boost the bank’s regional staffing levels to about 500 from the current 370, she told delegates at the Qatar Economic Forum in Doha.

Growth markets

The UAE and Saudi Arabia, the Arab world’s top economies, remain the biggest and main drivers of growth in the Middle East and Africa region, Mr Gori said.

“From the way we think about it, both markets need to grow. They have slightly idiosyncratic reasons for growth, which don't necessarily match,” he said. “We need to invest both in our presence in Dubai and Abu Dhabi, and in our presence in Riyadh, if we want to capture those opportunities.”

Plans are already in place to grow certain parts of the businesses in both markets, he said, declining to give specifics.

Saudi Arabia is larger both in terms of equity and debt capital market activity, but the deals flow has been equally robust in the UAE.

The IPO momentum in the region has driven the equity market business at a faster rate than the debt market, which is usually larger for banks around the world. “This region has done better on ECM than DCM, for sure. So, it's kind of counter cyclical to the rest of the world,” Mr Gori said.

Engine of growth

Deal activity will continue to be driven by IPOs, while the rising financing needs of Gulf sovereigns for their multibillion-dollar development projects will also support future growth.

While Saudi Arabia has hit some of its Vision 2030 milestones, it does not mean a slowdown in deal activity, Mr Gori said.

“I think it's business as usual in my opinion. Things come and go on as long as the narrative is correct and there is a trend, activity will come,” he said. “There is the excitement for the region, and therefore we expect more deal activity to come.”

While investment banking deals tend to be very visible and attract attention for a variety of different reasons, the actual engine of revenue growth is usually other lines of business, he said.

“Payments and markets, businesses are a larger proportion of the revenues than that of the investment banking,” Mr Gori said. “The 50 per cent growth [over the next five years] will come from all the other lines of business from payment, securities, asset management market and so forth.”