Revenue at the world’s 10 largest investment banks fell five per cent in the first half of the year, as continued weakness in fixed income trading departments outweighed a strong rebound in advisory services on deals, new data showed yesterday.
Total revenue was $82.3 billion in the first six months of the year, compared with $86.8 billion in the same period a year earlier, consultancy Coalition said.
Fixed income, currencies and commodities (FICC) was the worst performing area, with revenue down 13 per cent year-on-year to $39.6 billion, according to the figures.
Coalition said the downturn in FICC reflected structural and cyclical pressures facing banks, including tougher regulations that require banks to hold more capital against risky assets and a lack of volatility in financial markets.
Foreign exchange was the poorest line of business, with revenues down over a third from the previous year, its largest year-on-year decline since 2008.
Commodities trading outperformed for the second quarter running, however, with revenue up by more than a fifth.
Revenue from banks’ equity business was also lower in the first half, falling four per cent year-on-year to total $21.6 billion. Weakness in derivatives led the decline, offsetting higher demand for prime services.
A surge in mergers and acquisitions (M&A) and stock market listings in the first half lifted revenue at investment banking divisions, whose staff advise on deals, by 11 per cent to $21.1 billion.
M&A volumes reached their highest level in seven years in the year to end-June, while activity in equity capital markets rose 16 per cent.
A number of investment banks, including Barclays, Deutsche Bank and UBS are cutting costs to counter the slump in trading revenues and the stricter capital require-ments that are making some areas unprofitable.
Many have shed jobs as part of that effort and Coalition said headcount dipped four per cent in the first half.
Coalition, which tracks the performance of Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS, also gave forecasts for full-year revenue.
Annual revenue across major investment banks was expected to total $150.7 billion, a 2 per cent decline on 2013.