FICC Trading Revenues At Largest U.S. Banks Increased 76% In Q1

by Trefis Team
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Banks around the globe witnessed a surge in their FICC (fixed income, currencies and commodities) trading revenues, as an improvement in volatility across capital markets boosted the demand for debt as well as currency trading services. This trend was evident in the performance of the largest U.S. investment banks, who saw their FICC trading revenues surpass the already elevated level seen in Q1 2017. More importantly, their combined revenues of $14.45 billion were a good 76% higher than the unusually weak figure of $8.2 billion they reported in Q4 2017 due to extremely low market volatility.

While increase volatility played an important role in the sequential increase in FICC trading revenues, it should be noted that the securities trading industry is highly seasonal, with the first quarter of the year being the strongest period and the fourth quarter being the weakest. We capture the trends in FICC trading revenues for each of these investment banks over recent years in detail as a part of our interactive model. We highlight key observations related to their FICC trading revenues below.

The global FICC trading industry has seen secular changes since the economic downturn, as stricter regulations have had a fundamental impact on the level of activity in the industry. Although there was a spike in FICC trading activity over Q2 2016 – Q1 2017, things slowed down again over the next three quarters. This is seen clearly in the chart below, which captures changes in FICC trading revenues for each of the five largest U.S. investment banks over the last five quarters.

JPMorgan did extremely well to report an 8% increase in its FICC trading revenues year-on-year to retake the top spot from Citigroup. The two diversified banking giants have dominated the global debt trading industry over recent years, with Citigroup leveraging its larger geographical footprint to gain from positive trends in developing nations while JPMorgan has dominated the industry in the U.S. and Europe. Notably, Goldman’s 23% jump in FICC trading revenues year-on-year was because of the investment bank’s particularly bad commodities trading performance last year.

Details about how changes to Securities Trading Fees affect the share price of these banks can be found in our interactive model for Goldman Sachs | Morgan Stanley | JPMorgan Chase | Bank of America | Citigroup

Additionally, you can understand the impact of  Investment Banking Fees on the share price of these banks in our interactive model for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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