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It was a good quarter for investment banks: The five largest investment banks in the world — Goldman Sachs, JPMorgan Chase, Bank of America (BofA), Morgan Stanley, and Citigroup — posted their best quarter in over two years, the Financial Times writes. All five of the banks outperformed the S&P 500 over the past three months, while all of them but one reported higher-than-anticipated revenues — combined they reported USD 8.2 bn in investment banking revenues.
By the numbers: During 2Q, JPMorgan’s investment banking revenues surged 46% y-o-y to reach USD 2.5 bn, driven by increased fees, according to the lender’s earning release (pdf). Bank of America saw a 29% y-o-y rise in corporation investment banking fees to USD 1.6 bn, according to its earnings release (pdf). Morgan Stanley exceeded expectations with a 51% y-o-y jump in investment banking revenues, which sat at USD 1.62 bn during the quarter, boosted by heightened fixed income underwriting. Citigroup’s investment banking revenue jumped 60% y-o-y to USD 853 mn and Goldman Sachs’ investment banking fees saw a modest 21% y-o-y rise to USD 1.73 bn.
Dealmaking is picking up thanks to more interest rate visibility: Corporate banking clients are more comfortable relying on “bread-and-butter” banking services such as transaction advisory and debt offerings thanks to a steadier economic backdrop, according to the Wall Street Journal. Bankers are hopeful that a two-year dealmaking lull is about to come to an end with clever visibility on interest rates.
Debt underwriting led investment banking revenues, soaring over 50% y-o-y to reach USD 3.7 bn among the top five banks — debt-related fees surged as companies capitalized on stable interest rates to refinance or secure new debt.
Revenues from M&As saw a modest 25% y-o-y increase in 2Q, reaching USD 2.7 bn, according to FT. Despite fewer large transactions closing this year, high-value transactions are on the rise.
MARKETS THIS MORNING-
Asian markets are in the red this morning as chip-related stocks fell on Trump’s comments on Taiwan (we have more in What We’re Tracking Today), and news of potential restrictions on US exports made the rounds. Japan’s Nikkei is down 2.7%, while the Topix and Kospi both fell 1.3%. US futures inched higher after a bad day for the Nasdaq.
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ADX |
9,168 |
+0.1% (YTD: -4.3%) |
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DFM |
4,132 |
+0.5% (YTD: +1.8%) |
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Nasdaq Dubai UAE20 |
3,577 |
+0.5% (YTD: -6.9%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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EIBOR |
4.9% o/n |
5.1% 1 yr |
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TASI |
12,158 |
+0.6% (YTD: +1.6%) |
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EGX30 |
28,340 |
+1.8% (YTD: +13.8%) |
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S&P 500 |
5,588 |
-1.4% (YTD: -17.2%) |
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FTSE 100 |
8,187 |
+0.3% (YTD: +5.9%) |
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Euro Stoxx 50 |
4,891 |
-1.1% (YTD: +8.2%) |
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Brent crude |
USD 85.08 |
+1.6% |
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Natural gas (Nymex) |
USD 2.05 |
+0.7% |
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Gold |
USD 2,465 |
+0.2% |
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BTC |
USD 64,298 |
-0.5% (YTD: +52.1%) |
THE CLOSING BELL-
The DFM rose 0.5% yesterday on turnover of AED 350.9 mn. The index is up 1.8% YTD.
In the green: Shuaa Capital (+14.7%), Agility (+4.9%) and Ithmaar Holding (+3.6%).
In the red: Al Salam Sudan (-5.7%), Al Salam Bank (-2.4%) and Parkin Company (-2.3%).
Over on the ADX, the index closed up 0.1% on turnover of AED 1 bn. Meanwhile Nasdaq Dubai also rose 0.5%.
