For the second quarter of 2011, trading revenues are predicted to fall for investment banks. Fixed income will fall 30% and equities will fall 15%. The European debt crisis and slowing US economy are contributing factors to the downturn. Investors are spooked by both and have ratcheted down their trading volumes.
Additionally, fixed income, currencies and commodities trading are down because of de-leveraging by hedge funds, the shutdown of proprietary trading desks by banks, widening credit spreads and lower volatility. Commodities trading revenue is contributing a larger portion to the revenue mix while debt trading is shrinking. Quarter over quarter comparison for equity is down 32%.
Trading accounted for 56% of Goldman Sachs' revenue compared to only 16% for Bank of America.
The source can be accessed here.
Nice information about trading revenues falling for banks. Bank investors may have to wait at least another quarter for trading to rebound as analysts expect lower trading revenue in the current period, the fifth straight year over year drop, amid weaker volume and market declines. Thanks.
ReplyDelete