Trading revenue hits record high, but cost pressures are hard to hide as operating expenses for Wall Street big banks are generally increasing.

Driven by intensified market volatility and strong customer trading demand, major Wall Street banks set new historical highs in trading business in the second quarter. However, while revenue saw a significant increase, the rise in employee compensation, benefits, and business investment also raised operating costs, which became a common pressure for many banks. Jeremy Barnum, Chief Financial Officer of JPMorgan Chase (JPM.US), stated that the strong performance of the trading business propelled the bank to a good start in the first half of the year. Meanwhile, expenses such as employee compensation increased, but this type of cost growth is considered "positive" and reflects normal investment coming from business growth. However, JPMorgan Chase raised its full-year cost expectations to around $107.5 billion, higher than the earlier expectations released by CEO Jamie Dimon. Citigroup (C.US) also mentioned that the increase in costs in the second quarter was mainly driven by the rise in employee compensation and benefits. The company's total costs for the quarter increased by nearly 5% year-on-year, reaching $14.2 billion. In the second quarter, Bank of America Corp (BAC.US) saw a year-on-year increase of 8% in non-interest expenses to $18.6 billion, higher than analysts' expectations of $18.35 billion. The company stated in its performance materials that part of the cost increase came from the related costs of income growth, as well as the continued investment in its workforce, brand building, and technology field. Alastair Borthwick, Chief Financial Officer of Bank of America Corp, mentioned during the earnings call that future cost levels will mainly depend on revenue performance. "If revenue does not reach current levels, costs will naturally decrease; if revenue can maintain its current level, then the current cost structure is what is needed to support the company's operations." Goldman Sachs Group, Inc. (GS.US) also faced pressure from rising costs. Despite the company's record high stock trading revenue of $7.42 billion in the second quarter, operating expenses increased by 26% year-on-year to $11.67 billion. Overall, with the record-breaking performance in trading business driving optimism for the profit prospects of major banks, the market showed a positive sentiment towards bank stocks on Tuesday. Amid continued market volatility and active customer trading, the trading business is expected to continue contributing substantial income for major banks. However, with increasing competition for talent, rising technology investment, and intensifying competition in talent, cost control will become an important focus for investors in the future.