Fitch: 3Q15 U.S. Banking Capital Markets Revenues Down on Weak Trading Results
Advisory net revenues were up 12% from the sequential quarter and 23% from the year-ago quarter. However, advisory represented only 10% of aggregate investment banking and advisory net revenue in 3Q15, so it could not offset the trading decline in Fixed Income, Currency and Commodities. The slow IPO market also stalled equities underwriting net revenues as many public offerings were delayed due to market conditions.
"Following a weak third quarter, we expect headwinds to remain in the fourth quarter of 2015 in Fixed Income, Currency and Commodities due to seasonal factors and still challenging market conditions as firms continue to wait for volatility that drives better client engagement," said Justin Fuller, Senior Director, Financial Institutions. "Robust M&A activity will bolster advisory revenues through the end of the year, but it's unlikely that it will be enough to offset sluggish trading revenues."
If the Federal Reserve makes a move to raise interest rates at some point this year the rates business would likely improve; however, this could negatively impact revenue in credit mortgage and securitized products.
J.P. Morgan (1st), Goldman Sachs (2nd) and Citi (3rd), continue to dominate market share rankings, unchanged from the 2Q15.
The full report, 'U.S. Banking Capital Markets Update: 3Q15,' is available at www.fitchratings.com.