Through the lockdowns and great recession of 2020, the world’s leading investment banks were big winners, benefiting from tidy increases both in trading revenues and fees for arranging equity and debt financing.
Full year earnings announcements tell the story. At JPMorgan, for example, fixed income, currencies and commodities markets revenues were 45% higher in 2020 than in 2019; equities revenues were up 33% and investment banking fees rose 25%.
The corporate and investment bank unit increased its return on equity (ROE) from 14% in 2019 to 20% in 2020, compensating for the retail bank where ROE went the opposite way, falling from 31% in 2019 to 15% in 2020.
Investors now wonder what other source of revenue might pick up in 2021 if, as seems likely, that boom in trading and capital markets financing tails off, loans barely grow, non-performing loans rise and net...
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