S&P Ratings News November 11, 2009, 5:52PM EST

Global Banks: A Securities Blanket for Q3 Earnings

Big institutions' trading, investment banking, asset management, and wealth management activities helped offset persistent asset-quality declines

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Generally solid earnings of global banks' securities-related businesses, including various trading, investment banking, asset-management, and wealth-management activities, bolstered third-quarter results. In some cases, this helped to stabilize overall profitability—and credit ratings—despite continuing asset-quality pressures at their commercial-banking operations.

Counterparty Credit Ratings/Outlook*

	Holding company	Operating company
Bank of America (BAC)	A/Stable	A+/Stable
Barclays (BCS)	A+/Negative	AA-/Negative
Citigroup (C)	A/Stable	A+/Stable
Credit Suisse (CS)	A/Stable	A+/Stable
Deutsche Bank (DB)	N.A.	A+/Stable
Goldman Sachs Group (GS)	A/Negative	A+/Negative
JPMorgan Chase (JPM)	A+/Negative	AA-/Negative
Morgan Stanley (MS)	A/Negative	A+/Negative
UBS (UBS)	N.A.	A+/Stable

*As of Nov. 10, 2009. N.A.-Not available.

Source: Standard & Poor's Research.

Healthier business conditions continue to have the most visible effect on trading revenues—particularly on fixed-income trading revenues. Transaction volume has surged in several product segments within fixed-income trading as clients have regained their risk appetites, to some extent, and moved to reverse their prior flight into the perceived safe haven of government bonds. Persisting low short-term interest rates, coupled with the lack of any signs that inflation is heating up, have helped. Moreover, bid/ask spreads, although narrower than those reported earlier in the year, remain relatively wide from a historical perspective.

The competitive environment is more favorable because fewer major trading firms are open for business, and some players remaining in a defensive posture. Thus, although there was a normal seasonal weakening of revenues in the third quarter compared to the second, trading revenues remained very strong.

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