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Investment banking: Revenues disappoint in the US in Q2

Sales and trading revenues slump; Morgan Stanley back in the game

The second-quarter earnings for most US investment banks reflected a challenging period. Markets remain jittery and investors and corporates continue to be uncertain. Investment banking fees were down year on year for JPMorgan, Bank of America Merrill Lynch, Citi, Goldman Sachs and Morgan Stanley. Those fees were also down on the first quarter for all but Bank of America and JPMorgan.

A sharp downturn in equity underwriting fuelled the decrease in overall investment banking revenues. JPMorgan’s equity underwriting revenues were down 68% from the same quarter last year, and down 14% since the first quarter of 2010.

Second quarter shows challenges to US investment banks
Investment banking and sales and trading revenues
Source: Bank earnings releases

Subdued IPO market
The decline is attributed to a disappointing global IPO market, as well as a reduced need for the banks themselves to come to the equity markets this quarter . There were 39 US-listed IPOs in the second quarter, which is triple the number of issues in the same quarter last year but a long way off a return to healthy IPO levels.

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