Large investment banks have reported a surge in trading revenues in the fourth quarter of 2016, led by a significant increase in fixed income trading activity.
Goldman Sachs saw a 78% increase in net revenues for fixed income, currency and commodities (FICC) trading in the fourth quarter last year, compared to the same period in 2015.
“[FICC] operated in an environment generally characterised by improved market conditions, including rising interest rates and tighter credit spreads,” Goldman explained.
The bank’s institutional clients services business - which includes equities and FICC trading - saw revenues grow 25% to $3.6 billion, compared to the fourth quarter in 2015.
Lloyd Blankfein, chief executive officer at Goldman Sachs, said: “After a challenging first half, the firm performed well for the remainder of the year as the operating environment improved.”
JP Morgan reported similar statistics, with a 32% surge in trading revenues to $5.7 billion in the fourth quarter of 2016, again driven by fixed income activity.
The US investment bank saw fixed income markets revenues increase 31% compared to the fourth quarter in 2015, as equities revenues grew 8%.
“Credit and securitised products revenue reflected increased client risk appetite. Commodities revenue improved on increased client activity in a better energy market,” JP Morgan said.
At Morgan Stanley, sales and trading revenues grew 39% in the fourth quarter of 2016, compared to the same period in 2015.
Fixed income revenues were up from $550 million in 2015, to $1.5 billion in the fourth quarter, again due to “improved market conditions compared with the prior year period.”
Citigroup reported saw its markets and securities services revenues increase 24% to $4.1 billion in the fourth quarter of 2016, with fixed income up 36% compared to the fourth quarter in 2015.
The growth reflected “increased client activity and improved trading conditions in spread products and rates and currencies,” Citi said.