JPMorgan Thinks Investment Banking Revenue Will Tumble

Revenue from investment banking will tumble during the second quarter from a year earlier, according to a JPMorgan Chase & Co. analysis of global lenders.

After a normal April, May is proving weak for revenue from fixed income, currencies and commodities when allowing for seasonal differences, analysts led by Kian Abouhossein said in a note to clients Tuesday. Equities are outperforming due to strong derivatives, benefiting firms such as Societe Generale SA, UBS Group AG, and Morgan Stanley, the note said.

“We are witnessing a slowdown in investment banking revenues in the second quarter of 2015, potentially more than normal seasonality, driven by weakness in rates following a strong first-quarter 2015 performance,” the analysts wrote.

Higher trading revenue boosted profit at global investment banks in the first quarter, partly supported by the European Central Bank’s quantitative easing program. The pick-up in fixed income, currencies and commodities is coming to an end, with JPMorgan expecting quarter-on-quarter declines for eight banks ranging from 15 percent for Societe Generale to 30 percent for Deutsche Bank AG.

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