{"id":34202,"date":"2025-07-14T04:18:40","date_gmt":"2025-07-14T04:18:40","guid":{"rendered":"https:\/\/financialrush.com\/?p=34202"},"modified":"2025-07-14T04:18:40","modified_gmt":"2025-07-14T04:18:40","slug":"investment-banking-set-to-extend-worst-run-in-over-a-decade","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=34202","title":{"rendered":"Investment banking set to extend worst run in over a decade"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description o3-type-body-base\"><span>Simply sign up to the <!-- -->US banks<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=dd9a7e83-5a3e-45b3-b2af-8b2a124474c6&amp;concept-id=456d01ad-ea50-4aa7-8d7f-b9737216d453\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Investment banking is on course to extend a record streak of underperformance, supplying less than a quarter of Wall Street revenues at the biggest US banks for the 14th quarter in a row. <\/p>\n<p>Traders are due to come to the rescue of their advisory colleagues once again when the banks report second-quarter results next week, with total trading revenues at the five largest <a href=\"https:\/\/www.ft.com\/us-banks\" data-trackable=\"link\">Wall Street banks<\/a> forecast to be $31bn \u2014 more than three times the figure for investment banking. <\/p>\n<p>Analysts expect trading revenues at JPMorgan Chase, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley will be almost 10 per cent higher than a year ago. <\/p>\n<p>They forecast that revenues from <a href=\"https:\/\/www.ft.com\/investment-banking\" data-trackable=\"link\">investment banking<\/a>, the other part of the banks\u2019 Wall Street operations, will fall almost 10 per cent to $7.5bn, according to consensus data compiled by Bloomberg. <\/p>\n<p>If the earnings match estimates when the groups report results on Tuesday and Wednesday, investment bankers will have contributed less than 25 per cent of Wall Street revenues \u2014 distinct from money earned from retail banking and money management activities \u2014 since the start of 2022. <\/p>\n<p>This would be the longest period in which they have failed to breach that threshold since at least 2014.<\/p>\n<figure class=\"n-content-image n-content-image--full\" data-component=\"image-set\"><picture><source media=\"(min-width: 700px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A396e0120-bcab-4472-9f69-b4add1d1bbc3?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A396e0120-bcab-4472-9f69-b4add1d1bbc3?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A396e0120-bcab-4472-9f69-b4add1d1bbc3?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=3 3x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A396e0120-bcab-4472-9f69-b4add1d1bbc3?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=4 4x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A396e0120-bcab-4472-9f69-b4add1d1bbc3?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=700&amp;dpr=5 5x\" width=\"3500\" height=\"2500\"\/><source media=\"(max-width: 490px)\" srcset=\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A499f9ae6-09d8-4d94-8fa3-0cd869a7db78?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=1 1x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A499f9ae6-09d8-4d94-8fa3-0cd869a7db78?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=2 2x,https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/ftcms%3A499f9ae6-09d8-4d94-8fa3-0cd869a7db78?source=next-article&amp;fit=scale-down&amp;quality=highest&amp;width=490&amp;dpr=3 3x\" width=\"1500\" height=\"2000\"\/><\/picture><\/figure>\n<p>Although trading and investment banking are both volatile businesses, the length of the latter\u2019s downturn highlights how quiet dealmaking and equity capital markets have been since the bursting of the 2021 pandemic-era bubble. <\/p>\n<p>It also underlines how strong the trading business has been following a moribund period in the 2010s, when low interest rates and muted volatility held down revenues.<\/p>\n<p>Banks facilitate and finance trades. They benefit when activity levels are high and prices are volatile.<\/p>\n<p>\u201cThis is a normal environment, whereas the low [volatility] environment of the 2010s was the abnormal part,\u201d said Chris Kotowski, research analyst at Oppenheimer &amp; Co.<\/p>\n<p>In the past three years, financial markets have grappled with rising interest rates, conflicts in Ukraine and the Middle East, and protectionist policies after Donald Trump\u2019s return to the White House. <\/p>\n<p>These same trends have damped the ability of company leaders and investment firms to do deals, despite continued optimism from bankers about the potential pipeline. <\/p>\n<p>\u201cI think 2025 is more or less done [for investment banking],\u201d Kotowski said. \u201cYes you could get a strong quarter of equity issuance in the fall, and that would help numbers. The M&amp;A is going to be more a function of what\u2019s been announced already for the back half of the year.\u201d<\/p>\n<p>Investors tend to value revenues from investment banking more highly than trading because it can be higher margin and less capital-intensive.<\/p>\n<p>Investors are still betting that the long-anticipated recovery in investment banking will materialise, with Goldman\u2019s stock price recently surpassing $700 for the first time. <\/p>\n<p>\u201cThe first half of the quarter was rough for obvious reasons. But there\u2019s obviously a lot more optimism about the outlook here,\u201d said HSBC banking analyst Saul Martinez.<\/p>\n<p>The same political and economic stability that investors hope will grease the wheels for deals could ease the market volatility that has buoyed banks\u2019 trading revenues. <\/p>\n<p>Revenue from trading \u201chas been really elevated and I don\u2019t know that you can make the case convincingly that you\u2019re going to see a lot of growth from here\u201d, said Martinez. <\/p>\n<p>JPMorgan and Citi report results on July 15, with BofA, Goldman and Morgan Stanley reporting the following day. <\/p>\n<p>Along with Wells Fargo, the group represents the six largest US banks by assets. Net income for the six banks overall is expected to fall about 13 per cent from the same quarter last year. <\/p>\n<p>The steepest drop is likely to be at JPMorgan, with analysts predicting a decline of 30 per cent from a year ago, when the bank recorded a one-off gain of almost $8bn from its stake in the credit card company Visa. <\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/dd9a7e83-5a3e-45b3-b2af-8b2a124474c6\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the US banks myFT Digest &#8212; delivered directly to&hellip;\n","protected":false},"author":5,"featured_media":34203,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-34202","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/34202","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=34202"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/34202\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/34203"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=34202"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=34202"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=34202"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}