Weekend Economists Toast the Apostle of Ireland March 14-16, 2014

[Demeter]

3. Investment Bank Revenue to Decline 11%, JPMorgan Says

http://www.bloomberg.com/news/2014-03-13/investment-bank-revenue-to-decline-11-jpmorgan-says.html

The world’s top investment banks may see combined revenue from trading, underwriting and advising on mergers drop 11 percent in the first quarter as clients cut back on activity, JPMorgan Cazenove analysts said. Barclays Plc (BARC) and UBS AG (UBSN) may post the biggest declines compared with the year-earlier period, down 15 percent and 14 percent respectively, analysts led by Kian Abouhossein wrote in a note to clients today.

A decline in price swings and margins will contribute to a 19 percent contraction in revenue from trading fixed-income, currencies and commodities, the analysts wrote. Sales from trading stocks are on course for a 6 percent decline in the quarter while revenue from advising on mergers and underwriting securities sales may rise 1 percent, the analysts said.

Among the global securities firms tracked by JPMorgan, Morgan Stanley (MS)’s investment-banking revenue may fall the least, or 7 percent, Credit Suisse Group AG (CSGN) 8 percent and Goldman Sachs Group Inc. (GS) 10 percent.

UBS is JPMorgan’s top pick because of its greater exposure to equity trading relative to FICC, while Deutsche Bank AG (DBK) is the analysts’ favored stock with a large FICC business because of the firm’s reorganization.