Improvement In Debt Capital Market Activity Helps Debt Origination Fees Recover For Largest U.S. Banks

-0.23%
Downside
36.01
Market
35.93
Trefis
BAC: Bank of America logo
BAC
Bank of America

The five largest U.S investment banks made over $3.8 billion in debt origination fees in the second quarter of 2018 – marking a recovery in this figure from the unusually low $3.6 billion in the previous quarter. That said, total debt capital market activity was notably lower in Q2 2018 compared to the year-ago period due to the Fed’s ongoing rate hike process. Also, as many U.S. companies had accelerated their capital raising plans over 2016-2017, Q2 2017 was an extremely strong period for the investment banks – as evidenced by the fact that their debt origination fees nearly reached $4 billion for that period.

We capture the trends in fees for each of these investment banks over recent years in detail as a part of our interactive model on debt origination fees, while also forecasting how this revenue is likely to change in 2018. We highlight key observations related to their debt origination fees below.

Relevant Articles
  1. Trailing S&P500 by 26% Since The Start Of 2023, What To Expect From Bank of America Stock?
  2. Bank of America Stock Has An 83% Upside To Its Pre-Inflation Shock
  3. Bank of America Stock Is Trading Below Its Intrinsic Value
  4. Bank of America Stock Is Trading Below Its Intrinsic Value
  5. Is Bank Of America Stock Undervalued?
  6. Is Bank of America Stock Fairly Priced?

The table below details the trend in debt origination fees for each of these banks in the last five quarters. The green-to-yellow shading along a column highlights the relative performance of each bank in any given quarter. These banks usually capture around 35% of the global debt capital market wallet share for any given quarter.

Total debt origination fees for the industry are taken from Thomson Reuters’ latest investment banking league tables, and include fees from syndicated loans. Figures for individual banks are reported as a part of their quarterly results.

Bank of America and JPMorgan are the two biggest players in the global debt capital markets, with one of the two banks capturing the #1 spot in terms of total debt origination fees every single quarter since the economic downturn. In fact, these banks have captured the #1 as well as #2 position in all but two of the last 34 quarters (Citigroup was at #2 in Q4 2015 , and Goldman secured the #2 position in Q4 2017). While both banks have a strong grip on the U.S. debt capital market, Bank of America has historically fared better in U.S. investment grade corporate debt, while JPMorgan has the upper hand in the U.S. high-yield corporate debt segment.

Details about how changes to Debt Origination Fees (and other Investment Banking Fees) affect the share price of these banks can be found in our interactive model for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
More Trefis Research
Like our charts? Explore example interactive dashboards and create your own