The big investment banks could see revenues decline as much as 11% in the first quarter, analysts at JPMorgan Chase & Co. (JPM) warn.
Barclays Plc (BARC) and UBS AG (UBSN) may post the biggest declines compared with the year-earlier period, down 15% and 14% 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% contraction in revenue from trading fixed-income, currencies and commodities, the analysts wrote. Sales from trading stocks are on course for a 6% decline in the quarter while revenue from advising on mergers and underwriting securities sales may rise 1%, the analysts said.
Among the global securities firms tracked by JPMorgan, Morgan Stanley (MS)’s investment-banking revenue may fall the least, or 7%, Credit Suisse Group AG (CSGN) 8% and Goldman Sachs Group Inc. (GS) 10%.
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.