Bond trading finally pays off for top investment banks

Fixed income sales across top investment banks globally increased for the first time in four years in 2016.

Fixed income, currency and commodities revenues at the top 12 investment banks around the world increased for the first time in 2016 since 2012.

Driven by strong results in credit and securitisation, revenues increased from $69.9 billion in 2015 to $75.9 billion in 2016, according to data from Coalition.

In 2012, sales in fixed income stood at $102.7 billion, but this dropped 31% over the course of four years.

Large investment banks enjoyed a surge in fixed income profits in 2016, with Barclays, Societe Generale and HSBC all reporting an increase in trading sales.

The markets business at Barclays saw income surge 9% to £5.2 billion in 2016, driven by an increase across fixed income products compared to the year prior.

Credit income soared 44% in 2016 to £1.1 billion compared to 2015 due to an overall strong performance in fixed income flow credit from market volatility and client demand, Barclays said.

Similarly, HSBC’s global markets business saw sales increase by $353 million in 2016 to almost $15 billion, driven by a surge in fixed income trading.

Adjusted revenues for credit products grew 27% in 2016 compared to the year prior, as rates product sales surged 54% to $2.1 billion.

The fourth quarter in 2016 saw profits in bond trading increase for Goldman Sachs, JP Morgan and Morgan Stanley.

Goldman Sachs saw a 78% increase in net income for fixed income, currency and commodities (FICC) trading in the fourth quarter last year, compared to the same period in 2015.

JP Morgan reported similar statistics, with a 32% surge in trading profits to $5.7 billion in the fourth quarter of 2016, again driven by fixed income activity.

At Morgan Stanley, sales and trading income grew 39% in the fourth quarter of 2016, compared to the same period in 2015.