Capital Markets
In aggregate, banks in this note reported operating revenue of $67bn, 14% ahead of 1Q24. American and European banks reported similar rates of growth, but with notable difference in the revenue mix: the former outperformed in syndication fees and Equities, while European banks grew their FICC revenue faster. Costs also grew, but at a much slower rate; as a result, the aggregate pre-tax profit jumped 18% y/y. The exceptional volatility that marked the first 100 days of the new US administration boosted volume-related revenues. VIX hovered around 15 when the new administration arrived; by the end of March, it was firmly in the 20+ territory before hitting 66 in early April, the level last seen five years ago. Unsurprisingly, market operators and liquidity providers reported record volumes in April.
Commercial Banking & Treasury Services
In Europe, the tightening of credit standards was smaller than generally expected, and was driven almost entirely by banks in Germany (and four smaller Eurozone countries). Demand for corporate loans softened slightly across LME and SME market sectors. In the US, corporate loan demand grew throughout the 1Q25, ending the quarter only slightly below 1Q24.
A notable increase in payments and trade financing volumes – partly offset by margin compression in deposits – seen in 1Q25 may taper off: the trade war could reduce the revenue from payments.
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