Capital Markets
Combined 1H26 revenue reached $168bn, up 31% year‑on‑year, driven by record Equities revenue and a surge in Banking fees; pre‑tax profits in both areas doubled. Bolstered by exceptionally favourable domestic market conditions, American banks significantly outperformed their European peers on both revenue and profit growth. Private credit is increasingly being transformed into investment grade bonds via insurance guarantees, letting insurers and pension funds hold inherently risky private market exposures with far lower capital charges. After a rapid expansion, this engineered market now spans capital call facilities, collateralized fund obligations, rated feeders, and NAV loans. The setup carries clear echoes of 2008: growing structural complexity and dependence on insurer ‘wrappers’ can obscure where losses ultimately sit, and because many deals hinge on a single guarantor’s rating, any downgrade could trigger simultaneous stress and forced selling across multiple securities.
Commercial Banking & Treasury Services
Commercial/corporate banking in the US was healthy and active, with strong loan growth, robust deposit inflows, and selective tightening for low(er)‑quality credits. Corporate borrowers stepped in to replace weaker private equity demand, driving leveraged loan issuance. Europe, by contrast, saw moderate tightening in credit standards, higher borrowing costs, and cautious bank behaviour; however, corporate loan demand held up. APAC was mixed though generally strong, with Japan benefiting from rate shifts, India seeing strategic restructuring, and robust corporate flows in Hong Kong and other regions. Treasury services revenue in the US and, to a lesser extent, Europe, was strong, driven by deposits, cross‑border flows, corporates’ need for liquidity and cash‑flow visibility. APAC also made a major contribution, driven by strong cross‑border and payments activity, driven by supply‑chain complexity, e‑commerce, and travel flows.
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