Fixed-Income Revenue Dropped Last Year to Lowest Since 2008

  • FICC product sales slumped 9% in 2015 to $69.9 billion
  • Worst performers were credit, securitized products: Coalition

The world’s biggest banks last year generated the least revenue from fixed-income products since the 2008 financial crisis as businesses under-performed, clients pulled back from trading and assets lost value, according to research firm Coalition Development Ltd.

Sales from fixed-income, currencies and commodities products, known as FICC, fell 9 percent in 2015 to $69.9 billion, said Coalition, which surveyed lenders including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Deutsche Bank AG. Sales of credit products, including distressed debt and bonds in emerging markets, slumped 32 percent to $12.4 billion, about half of what banks generated from the assets in 2010.

Lenders worldwide are firing workers and pulling back from some businesses as new rules that make bond-trading less profitable combine with a slump in the price of oil and a slowdown in the Chinese economy. The turmoil has continued into 2016 for some assets, with U.S. high-risk, high-yield bonds down almost 3 percent so far this year, according to Bank of America Corp. data.

“Fixed-income struggled throughout,” Coalition analysts wrote in the report. “Continued weakness in credit-related products led to overall under-performance.”

Sales of securitized products, which include mortgage-backed securities, tumbled 25 percent to $9.3 billion. Revenue from products tied to interest rates and currencies increased, Coalition said.

Equity-trading sales climbed 10 percent to $49.8 billion, the highest since at least 2010, while revenue from investment-banking fell 5 percent to $40.5 billion, the survey shows.

Before it's here, it's on the Bloomberg Terminal.