Advisory the bright spot as US investment bank revenues fall
Aggregate investment banking and markets revenues fell 12% at the big five US investment banks in the first quarter of 2022. Their chief executives were confident that dealflow will return, but were also united in their uncertainty over how central bank responses to inflation will play out in markets.
Rising provisions for Russia-related risks, weaker investment banking revenues and sporadically strong trading results were common themes as the big five US investment banks reported first-quarter earnings over the past week.
Chief executives at all five firms were keen to highlight continued strong dialogues with clients, however, suggesting that while areas such as equity capital markets and leveraged financewere being hit by market volatility, dealflow will return as clients reset expectations.
In investment banking and sales and trading businesses, first-quarter revenues across the five banks fell 12% overall year on year, with advisory the only standout performer, rising 25%.
Equity capital markets revenues plummeted 80%, dragging aggregate advisory and underwriting revenues down by nearly $5 billion, or 36%, as debt capital markets also fell. Within sales and trading, fixed income revenues were up 1% while equities fell 3%.
Advisory and underwriting revenues fell 28% at JPMorgan, 33% at Bank of America, 37% at Morgan Stanley, 40% at Goldman Sachs and 43% at Citi.