Sector: Capital Markets: Results Review 2Q13 / 6m13
Capital Markets: Results Review 2Q13 / 6m13 The capital markets 6m13 revenue for Top 12 investment banks reached $104bn, 5% above 6m12; the 2Q13 revenue totalled $48bn, an impressive 22% up versus 2Q12. Revenue grew in most major products, but this was partly offset by a sharp fall in FICC rates. Prop and principal investment revenue […]
Theme: Whither Commodities?
Whither commodities? Commodities trading has followed a number of phases: starting in 2008, the focus has been on oil, then electricity and then metals. In this time, banks have acquired a number of commodity assets and the physical component of their trading balance sheet has swollen to over 20%. A series of fines by the […]
Theme: Revenue, VaR and volatility
Revenue, VaR & volatility This note seeks to answer two questions: in the post-‘Crunch’ world, have investment banks been able to generate sustainable revenue from ever-diminishing Trading VaR? And, have they increased revenue-vs-VaR despite a decline in market volatility? The answer to both questions is ‘yes’. In fact, top-tier banks have vastly improved their returns […]
Banks: Morgan Stanley FICC re-tasked
Morgan Stanley: FICC re-tasked The FICC division’s new revenue target of $1.5-2.5bn per quarter appears attainable… … but challenging. Specifically, revenues may be impacted by RWA cuts; and we doubt the integration between Institutional Securities and Global Wealth Management will be smooth. Our quick analysis of the balance sheet, however, indicates that FICC is already […]
Theme: Evolution of sales & trading profitability
Evolution of sales & trading profitability The sales and trading operations of the Top 12 banks have, as a group, been profitable in each of the last six years; even the post-‘Crunch’ nadir – reached in 2011 – was only 10% below 2007. In 2012, banks accelerated their adjustment to the ‘new’ trading environment. Top performers […]
Sector: Results Review 1Q13
Results Review: 1Q13 Capital markets 1Q13 revenue of top 12 banks totalled $56bn, 6% below 1Q12. Primary fee activities grew strongly, with the top 3 banks gaining market share in DCM bonds, securitisation, and ECM. In sales & trading, FICC declined from a very strong 1Q12; and in equities the initial optimism proved unfounded as the overall […]
Banks: UBS Restructured
UBS Restructured As forecast in our Oct-12 note, UBS Investment Bank has, in 1Q13, had little trouble meeting its cost/income and return on allocated equity (RoAE) targets. There is no sign that fixed income clients are deserting the bank. UBS has retained some high margin/RWA-intensive businesses in their ‘Financing Solutions’ and FICC business units. This, […]
Theme: Investment Banks tech initiatives
Investment banks’ technology initiatives: highlights Banks’ investment in technology is accelerating as banks fight to maintain/develop edge in electronic markets; improve risk management; and achieve savings by rationalising complex system architectures. Such investment is time consuming – and costly. Programmes announced in recent years typically boosted the proportion of tech & ops in their total […]
Theme: Capital Markets planning
Capital Markets planning: assessing outcomes Banks reviewed here met most of their ‘firm’ cost/headcount reductions and RWA/funding targets, but also largely missed their revenue/profitability targets. This, we believe, is primarily a reflection of the turbulence in capital markets in recent years. Banks struggled to contain their costs in the early post-crisis years: only Citigroup, Deutsche […]
Theme: Global Governments
Shifting Sands of Global Government Investors From the mid-2000’s trading in G10 government bonds has been increasingly internationalised. More recently international flows have been driven by the demands of specific client segments. We explore some of these changes.