Bloomberg News

Global Investment Bank Revenue Seen Declining 2% in 2014

August 28, 2014

The world’s 10 biggest investment banks, including Goldman Sachs Group Inc. (GS:US) and Deutsche Bank AG (DBK), will probably see a 2 percent decrease in revenue this year after making less money from trading fixed income, currencies and commodities, according to analytics firm Coalition.

Revenue from debt units, equities trading and investment banking may drop to $150.7 billion from $153.3 billion in 2013, the London-based firm said in a statement today. Revenue fell 5 percent to $82.3 billion in the first half.

Revenue in investment banking, which includes advisory and underwriting businesses, may advance 13 percent to $42.9 billion this year after a 11 percent gain in the first six months was driven by a “surge” in stock sales, mergers and acquisitions, according to Coalition. That gain may be offset by a drop in equities and debt trading revenue, it said.

Fixed income, currencies and commodities may post a 9 percent drop in revenue this year to $67.4 billion after a 13 percent decrease in the first six months and a 19 percent slump in 2013. The business also saw the biggest reduction in staff numbers in the first half from the year earlier, amounting to about 1,900 positions, with Europe, Middle East and Africa and the Americas regions affected the most, Coalition said.

“Only a handful of market leaders remain committed to a ‘complete’ service, while the other banks have refocused their strategies around client, product and regional strengths,” Coalition said of the fixed-income business.

Commodities Trading

Commodities trading was the only business within the fixed-income units to post an increase in revenue in the first half. Raw-materials revenue rose 21 percent to $3.3 billion as a cold winter boosted trading in U.S. power and gas and investors increased interest in commodities, Coalition said.

Global investment banks are pulling back from commodities trading amid tougher regulation. Credit Suisse Group AG (CSGN), based in Zurich, said last month it will exit commodities trading, while JPMorgan Chase & Co. (JPM:US) agreed to sell its physical commodities unit to Mercuria Energy Group Ltd. in March.

Equities trading is forecast to see revenue fall 2 percent this year to $40.3 billion after a 4 percent decline in the January through June period. In 2013, it rose 24 percent.

The Coalition Index tracks the performance of the world’s 10 largest investment banks, which are Goldman Sachs, Deutsche Bank, JPMorgan, Morgan Stanley (MS:US), Citigroup Inc. (C:US), Bank of America Corp., Barclays Plc (BARC), Credit Suisse, UBS AG (UBSN) and BNP Paribas SA. (BNP)

Percentage changes are based on unrounded numbers, according to the statement.

To contact the reporters on this story: Elena Logutenkova in Zurich at elogutenkova@bloomberg.net; Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net

To contact the editors responsible for this story: Elisa Martinuzzi at emartinuzzi@bloomberg.net Simone Meier, Keith Campbell


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