Capital Markets: Results Review 1Q14
The top 13 investment banks recorded $54bn revenue in 1Q14: only 6% below 1Q13, and better than expected by most observers. FICC declined by 16% during this period – largely due to persistent weakness in Rates and FX – but this was offset by strong primary issuance and equities revenue.
With banks only trimming headcount during 1Q14, revenue/headcount productivity was largely unchanged from the prior year period except, of course, in FICC. As we forecast in our previous Results Review, another wave of headcount reductions seems to be looming: in early May, Barclays announced a major restructuring and, faced with the continued weakness in FICC markets, we expect other banks will be reviewing their operations too.
That said, we also expect that US banks – which are, generally, better capitalised than their European counterparts – will reaffirm their commitment to FICC (excluding commodities), seeking to grow market share as competitors pull out. In 1Q14, most US banks grew their share of the peer group FICC revenue (see below).