How Much Did The 5 Largest U.S. Investment Banks Make Through FICC Trading In Q3 2016?

+5.95%
Upside
180
Market
191
Trefis
JPM: JP Morgan Chase logo
JPM
JP Morgan Chase

The 5 largest U.S investment banks generated $14 billion in total FICC (fixed income, currencies and commodities) trading revenues over Q3 2016 – a gain of almost 50% y-o-y and 5% more than the already elevated figure for the previous quarter. Notably, these five banks usually account for between 30-40% of the global FICC trading revenues for any given quarter. [1]

IB_QA_US_FICCTrading_16Q3

FICC trading activity was depressed globally over the second half of 2015, and the trend continued into 2016 too – resulting in FICC trading revenues for Q1 2016 slumping to the lowest figure for the first quarter of the year since the economic downturn of 2008. A sharp increase in debt trading activity over the second quarter coupled with frantic currency trading activity immediately after an unexpected Brexit vote helped trading revenues over Q2. In the third quarter, volatility in interest rates as well as currency exchange rates helped boost total FICC trading revenues.

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IB_QA_US_FICCTradingChange_16Q3

The chart above captures changes in FICC trading revenues for each of the five largest U.S. investment banks. The red-to-green shading across a particular row should help visualize how these revenues have fluctuated from one quarter to another for individual banks.

JPMorgan dominates the industry, with the diversified banking giant ranking #1 in 22 of the last 24 quarters. Citigroup held the top spot in the other two quarters (Q3 2012 and Q2 2015). Although Morgan Stanley has been at the bottom of this list in each of the last 20 quarters, it should be noted that the investment bank has chosen to shrink its capital-intensive FICC trading desk over recent years to shore up its balance sheet. That said, the strong jump in FICC trading revenues for the bank over the last two quarters would indicate that the bank is rebuilding this unit – something that makes sense given that Morgan Stanley is now the best capitalized major bank in the country.

You can see how changes in market leader JPMorgan’s FICC trading yield impacts our price estimate for the bank by modifying the chart below.

See the links below for more information and analysis about the 5 largest U.S. investment banks:

See full Trefis analysis for Goldman SachsJPMorganMorgan StanleyBank of America | Citigroup

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Notes:
  1. Global Capital Markets 2016: The Value Migration, BCS Perspectives []