Banks Say Trading Is Taking Another Hit -- WSJ
December 06 2017 - 3:02AM
Dow Jones News
By Emily Glazer and Rachel Louise Ensign
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (December 6, 2017).
Bank executives are flagging another tough quarter for trading
as quiet markets again hurt a key Wall Street business.
Bank of America Corp. Chief Executive Brian Moynihan said at a
banking conference in New York on Tuesday that trading revenue is
likely to fall about 15% in the fourth quarter compared with the
year-earlier period.
At the conference, JPMorgan Chase & Co. finance chief
Marianne Lake also said trading revenue is expected to fall 15% in
the quarter.
Ms. Lake said there are "not many catalysts," and volatility
remains "low across the spectrum." Her remarks encapsulate what has
been a tough year for banks. Trading revenue has consistently
declined versus the prior-year period, with the biggest falloff
mostly occurring in the area of fixed income, commodities and
currencies.
Trading revenue has dipped 4.4% for the five large banks with
major investment-banking operations, as a group, in the first three
quarters of the year, compared with the year-earlier period.
That is largely because volatility remains near lows, despite
the constant drumbeat of political and geopolitical developments
that typically would spur market activity.
One big drag on volatility: Although the Federal Reserve has
been raising short-term interest rates, longer-term rates continue
at superlow levels in many countries, including the U.S., and
inflation continues to remain subdued.
Against that backdrop, and without specific catalysts in sight
that might produce big changes in rates, many investors are sitting
on their hands.
To be sure, JPMorgan has still had relatively good performance
in fixed income, currencies and commodities. Ms. Lake said she is
"very, very confident" the bank will maintain its market share,
though she didn't specify figures.
She added that the bank is making progress steadily on the
equities side of the trading business, pointing to growth in prime
and cash equities, among other areas.
Merger and capital markets activity also has been relatively
strong, which should continue to offset the trading
performance.
Mr. Moynihan said that investment banking was strong in the
quarter and that fees in the segment were on track to rise
"midsingle digits" in the quarter from the year earlier.
Write to Emily Glazer at emily.glazer@wsj.com and Rachel Louise
Ensign at rachel.ensign@wsj.com
(END) Dow Jones Newswires
December 06, 2017 02:47 ET (07:47 GMT)
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