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Foreign Exchange

FX Revenues slump 22% in first-half of 2011, Coalition says.

Reduced activity, tighter spreads due to growing competition and the Japanese tsunami in March, continued to depress profitability in the FX businesses of the major FX banks, particularly in Europe, according to a report by the consultancy firm Coalition.

Total G10 FX revenues in the first half of the year were estimated to have fallen 22% to about $4 billion, from $5.13 billion for the same period a year ago, and are forecast to fall 27% for the full year, the report shows. Despite weaker results, many banks have nevertheless maintained their investment in building-out electronic FX trading platforms in order to attract market share, Coalition added.


Fixed income revenues by product (2010-2011)- USD Billions
 
 Source: Coalition

Fixed income revenues as a whole were approximately 12% lower in the first half of the year. Revenues in equities remained largely unchanged in the first half of the year, while on a brighter note, revenues in origination and advisory businesses rose approximately 31%, with the majority of profits coming from increased M&A activity, according to the report.


Coalition, tracks the performance of the 10 largest investment banks globally, including Bank of America Merrill, Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley, Royal Bank of Scotland and UBS.


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