JPMorgan Is The King Of The Hill When It Comes To Trading Revenues
Total trading revenues for the 5 largest U.S investment banks exceeded $21.3 billion in Q1 2017 – roughly 15% higher than the figure for the previous as well as year-ago quarters. In fact, this was the best period for these banks in terms of total trading revenues since Q1 2014 – something that can be attributed to the seasonally boosted trading levels for the first quarter of the year, coupled with increased volatility in interest rate trading as the Fed sticks to its plan of gradually normalizing interest rates.
That said, JPMorgan’s dominance in the securities trading industry is evident from the chart below, as its average trading revenues over the last five quarters ($5.4 billion) was more than 32% ahead of the figure for its closest rival Citigroup ($4 billion).
Notably, JPMorgan has ranked #1 in every quarter since Q4 2010 (except for Q4 2012, when Goldman Sachs grabbed the top spot) primarily due to its strong presence in the global FICC trading industry. The diversified banking giant ended Goldman’s strong grip over the industry before the economic downturn of 2008 thanks to its acquisition of Bear Stearns at the peak of the downturn – leapfrogging it above other industry incumbents. Meanwhile, Goldman’s unusually weak FICC trading performance for Q1 2017 relegated the bank to the #5 position in the list in terms of total trading revenues.
The table below shows the proportion of total trading revenues for each bank that came from the FICC (fixed income, currencies and commodities) and equity trading desks over the last five quarters.
On average, FICC operations contribute roughly two-thirds of the total trading revenues for these banks, with equity trading bringing in the remaining one-third. But there is a lot of variation in this proportion across banks. While Citigroup relies on fixed income trading more heavily than the others (approximately 80:20), Morgan Stanley’s focus is on equity trading. Goldman seems to give both its trading desks roughly the same amount of importance, although their respective share of the total trading revenues fluctuates considerably from one quarter to the next based on prevalent market conditions.
You can see how changes in 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:
- Goldman’s FICC Trading Performance Hasn’t Been This Bad Compared To U.S. Peers In Six Years
- Morgan Stanley Generated More Than $10 Billion In Equity Trading Revenues Over The Last Five Quarters
- Goldman Pockets More Than 9% Of Global M&A Advisory Fees Over Slow Q1
- Equity Capital Market Recovery Boosts Underwriting Fees To Highest Level Since Early 2015
- Q1 Was The Best Ever First Quarter For U.S. Investment Banks In Terms Of Debt Origination Fees
- How Much In M&A Advisory Fees Did The 5 Largest U.S. Investment Banks Generate In 2016?
- How Much In Equity Underwriting Fees Did The 5 Largest U.S. Investment Banks Generate In 2016?
- How Much In Debt Origination Fees Did The 5 Largest U.S. Investment Banks Generate In 2016?
- How Much In Total Advisory & Underwriting Fees Did The 5 Largest U.S. Banks Earn In 2016?
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