Capital Markets
Following a very strong 4Q24, the aggregate FY24 operating revenue topped $220bn, 13% ahead of FY23, driven by the continued surge in Banking/Primary fees, as well as strong growth in Equities and FICC Macro. EMEA-headquartered banks outperformed their AMER counterparts across Banking, Equities and FICC, in all products except DCM Loans, FX and Credit. Front-office productivity jumped 10% y/y, with most significant gains seen in Banking and Equity Derivatives.
Despite an increase in variable comp and ongoing tech investment, FY24 total costs grew only 10% y/y, lifting the pre-tax margin to 33% for EMEA banks (from 26% in FY23) and 37% for AMER banks (+1% vs FY23).
Banks are optimistic regarding the outlook: the US leaders are expecting mid-teens y/y revenue growth in 1H25, underpinned by favourable markets as well as deregulatory drive in the US and, probably, the UK. In the US, the SEC approved the new stock exchange which will operate 23 hours during the five full days, from Sunday evening to Friday evening. The launch will be staggered, starting in 2H25.
Commercial Banking & Treasury Services
Compared to prior-year periods, commercial banking revenue flatlined in both 4Q24 and FY24. In Eurozone, a decline in lending rates was offset by weak loan demand and stricter collateral requirements. Eurozone banks’ tightening was driven by increasingly visible risks related to the economic outlook across much of the region and the heightened political risk in Germany and France; both trends are expected to extend well into 1H25. In the US, deposits costs grew, depressing margins, and loan balances were (very slightly) lower; however, these negative factors were partly offset by higher fee income. Treasury services FY24 revenue grew 3% y/y, mostly due to significant advancements in real-time payments and soaring demand for trade finance. EMEA banks outperformed. The tight interest rate environment is expected to support further growth in cash management solutions.
Download “CIB Review 4Q24/FY24”
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