Five Largest U.S. Banks Capture A 42% Wallet Share In Global Equity Capital Markets In Q2

by Trefis Team
Morgan Stanley
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The five largest U.S investment banks pocketed more than $2.2 billion in equity underwriting fees in Q2 2018 – the best performance in that regard in three years. The magnitude of their windfall in the quarter is demonstrated by the fact that these banks reported average equity underwriting fees of less than $1.4 billion in the previous ten-quarter period. While the total equity underwriting fees for all investment banks globally remained steady at $5.26 billion in Q2 2017 as well as Q2 2018 (according to data compiled by Thomson Reuters), the 40% jump in these revenues year-on-year for the five largest U.S. banks helped their wallet share jump to above 42% this time around from 30% a year ago.

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

The table below details the trend in equity underwriting 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. While these banks have a strong grip over the industry, with a wallet share of 33% in global equity capital markets, this figure was unusually elevated in Q2 2018.

Total equity underwriting fees for the industry are taken from Thomson Reuters’ latest investment banking league tables. Figures for individual banks are reported as a part of their quarterly results.

Incidentally, each of these five banks have figured once at the top of the list in the last five quarters in terms of highest fees for a quarter. JPMorgan reported the most equity underwriting fees for the quarter – edging past Morgan Stanley for the quarter. Notably, JPMorgan, Morgan Stanley and Goldman Sachs were all part of a nearly identical number of equity capital market deals completed in Q2 (between 110 and 115 deals each), with Goldman ranking #1 in terms of net proceeds for the quarter. The differences in these fees for these three banks can be attributed primarily to the extent of their involvement in the largest deals that closed over the quarter, as well as to gains realized by each bank from over-allotment benefits in the more successful IPOs.

Details about how changes to Equity Underwriting 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

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