Revenue at the world’s biggest investment banks may be down 18 percent in the third quarter after a drop in their fixed-income, currencies and commodities divisions, JPMorgan Cazenove analysts said.
Third-quarter FICC revenue may decline 24 percent from the previous quarter and by 35 percent from the same period last year, analysts led by Kian Abouhossein wrote to clients today, citing lower trading volume and tighter credit spreads.
Equities sales are expected to fall by 13 percent from the prior quarter because of low volatility and weak volume in equity derivatives. Advisory and underwriting revenue may slip by 14 percent, the analysts said.
The global investment banks tracked by JPMorgan are Credit Suisse Group AG (CSGN), UBS (UBSN) AG, Deutsche Bank AG (DBK), Goldman Sachs Group Inc., Morgan Stanley (MS), Barclays Plc (BARC), Societe Generale SA and BNP Paribas SA.
JPMorgan recommends UBS, Switzerland’s biggest bank, because of its business mix and Deutsche Bank, which is the cheapest among its peers based on price to earnings and price to net asset value, according to the note.
To contact the reporter on this story: Liam Vaughan in London at firstname.lastname@example.org
To contact the editor responsible for this story: Edward Evans at email@example.com