The combined 1Q16 operating revenue of banks in this report dropped 25% y/y, from US$54bn to US$41bn. Front office productivity also declined across the board, despite continuing/extended headcount cuts: 1,600 across BAML, BNPP, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs and Societe Generale, primarily in FICC, but also in equity derivatives (Credit Suisse) and DCM (Deutsche […]
Credit Suisse’s Mar-16 Strategy Update failed to immediately reassure investors. The bank expects a 40-45% year-on-year drop in Global Markets’ trading revenue, and a loss in 1Q16 In our view, Credit Suisse has the ‘wrong kind of fixed income’ for their strategy and current markets
European banks have lost market share in capital markets in a trend that began in 2010. This is most apparent in FICC, but Europeans have also lost ground in bond issuance, M&A/Advisory, ECM, and cash and equity derivatives. Prime services is the only product area in which European banks advanced strongly – at least until […]
This publication is supplementary to our quarterly Results Review; it shows banks’ capital markets quarterly revenue and semi-annual pre-tax profit and productivity dynamics relative to their peers in major regions. The full dataset includes operating revenue, expenses and pre-tax profit at the Level 3 product detail in 7 regions, as well as normalised client segment […]
Capital markets revenue for the banks in this report reached $175bn in FY15, 4% below FY14; 4Q15 accounted for $33bn, down 7% y/y. Equity and M&A/Advisory revenue advanced, but ECM, DCM and FICC all dropped sharply. The FY15 pre-tax profit was essentially unchanged versus FY14 as a drop in primary profitability – caused by a drop […]
The collapse of Standard Chartered’s ROE over the past three years was largely caused by rising impairment costs. In our view, the growth in impairments suggests that there are issues with the bank’s risk management, rather than with the underlying business proposition. The bank’s current approach appears fragmented and lacks some of the dynamic techniques […]
Barclays remains focused on underlying profitability. Historically, however, the bank’s main challenge was revenue generation, rather than cost control. Our analysis highlights APAC equities, global credit, EMEA securitisation and US commodities as key areas of weak profitability.
Boutique firms weathered the post-Crisis much better than US or European globals, but are saddled with high cost/income ratios. Based on current market trends, we expect US globals to continue gaining market share from European banks and boutiques.
Retail banking: RBS is the UK’s second-largest bank by revenue, but lags in cost efficiency and digital offering. RBS also faces challenges in its branch strategy: it appears to have too many branches for too few clients. Wealth management: suffers from weak cost/income and being underweight in investment revenue. RBS could increase its investment revenue, […]
In 3Q15, capital market revenue for 13 banks in this report reached $37bn, 12% below 3Q14; equity revenues grew slightly y/y, but issuance and advisory and particularly FICC dropped. The 9m15 revenue totalled $139bn, 4% below 9m14. Banks maintained tight cost controls, especially in comp & benefits, but – partly due to ongoing litigation charges – […]