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The Hayley Mail: Investment banks reveal Q1 trading carnage

First quarter revenues for fixed income and equities paint a very bleak picture for the trading world…

We are yet to see an investment bank boasting revenue increases within fixed income and equities businesses in the first quarter of 2016.

And it’s looking pretty unlikely that we’ll see any at this rate.

First quarter results are pouring in from global investment banks, revealing a rather gloomy start to the year for the trading world.

Goldman Sachs suffered massively in the first quarter of 2016, with its fixed income, currency and commodities (FICC) revenues plummeting by almost a half.

The bank explained the reasons behind the FICC revenue decreases were the “challenging environment” in which it had operated.

Morgan Stanley painted a similar picture, where its fixed income revenues really did halve in the first quarter this year.

Its fixed income and commodities sales declined 50% compared to Q1 2015, and again, the bank highlighted “challenging market conditions” as reasons behind its overall revenue declines.

Citi’s fixed income revenues in Q1 this year decreased slightly less than Morgan Stanley and Goldman Sachs, by just 11%.

A significant drop, but slightly better than other investment banks.

BAML highlighted “a weak trading environment” as the reason behind its drop in revenues for FICC, which fell 17% in Q1 2016 compared to 2015.

Equities revenues also fell across global investment banks.

Goldman Sachs, Morgan Stanley, Citi and BAML all reported revenue drops in equities sales for the first quarter of this year, compared to last year.

Goldman Sachs suffered most with a 23% decline in equities revenues in Q1 2016.

Lloyd C. Blackfein, CEO of Goldman Sachs, said the challenges facing the industry resulted in “headwinds across virtually every one of our businesses.”

It’s clear this has been one of the most difficult financial quarters for trading for investment banks around the world.

Of those who haven’t released first quarter results, UBS, Credit Suisse, Deutsche Bank, the carnage is expected to continue with analysts predicting revenue declines across the board.

Almost every global investment bank has revealed cost cutting plans amid plummeting revenues and increasing operating costs.

Banks have already started streamlining headcounts and some even cutting departments to drive profits, and these plans are long-term.

One thing is certain - investment banks suffered a terrible first quarter for trading sales – and job cuts will continue to dominate headlines in 2016 as the banks deal with the carnage.  

By Hayley McDowell
hayley.mcdowell@information-partners.com 

For in-depth analysis of Q1 2016 results from global investment banks, stay tuned to www.thetradenews.com