LONDON, March 15 The world's top banks are
expected to rake in billions more from bond trading in the first
quarter, with U.S. banks putting in another solid performance
and European banks taking even greater strides on the road to
recovery, Barclays said on Wednesday.
The increase is expected to come from higher trading
activity in U.S. credit and global rates markets as the Federal
Reserve prepares to move away from most other central banks in
the industrialised world and raise U.S. interest rates.
Revenue from fixed income, currency and commodities (FICC)
trading at the top five U.S. banks will rise 16 percent, while
European banks can expect growth four times faster than that
from a notably weak January-March period last year, Barclays
"Our recent meetings with New York-based investment bank
executives confirmed the upbeat outlook for franchise health.
More importantly, the message from European firms is a return to
franchise health that stretches beyond a single strong quarter,"
Barclays banking analysts Kiri Vijayarajah and Jason Goldberg
wrote in a note.
Bond trading revenue at most banks has been grinding lower
for about seven years as new regulation on proprietary trading,
derivatives and capital have restricted what banks can do in
bond markets, making the business less lucrative.
From 2010 to 2015, bond trading revenue fell 36 percent
across the industry, data from industry analytics firm Coalition
According to Barclays, revenue from FICC trading at the top
five U.S. banks in the first quarter is expected to rise 16
percent to $13.33 billion from $11.51 billion in the same period
That will drive a 10 percent increase in total investment
banking revenue to $26.87 billion from $24.52 billion. The
overall increase will be diluted by a 2 percent rise in equity
trading revenue and 7 percent rise in merger and acquisition and
underwriting revenue, they said.
Growth in some European banks' FICC operations could be even
greater, led by Credit Suisse, which had a particularly
weak first quarter last year. The Swiss bank could see FICC
revenue rise by as much as 64 percent to over 1 billion Swiss
francs, Vijayarajah said.
Earlier this week, analysts at JP Morgan said FICC revenues
in the first quarter across eight of the top U.S. and European
banks - excluding JP Morgan itself, the industry leader - will
rise by 34 percent to $11.82 billion from $8.84 billion.
Credit Suisse's FICC revenues will more than double to $1.23
billion from $516 million, and Morgan Stanley will see
revenues almost double to $1.6 billion from $873 million, JP
(Reporting by Jamie McGeever and Anjuli Davies; Editing by Ken