If you're hoping to keep your front office banking job throughout 2018, and to avoid losing your seat before bonuses are paid early next year, you might want to avert your eyes from the latest note from Buckingham Research analyst James Mitchell: it suggests banks' third quarter was miserable indeed.
Buckingham suggests banks' sales and trading divisions had an almost universally bad third quarter compared to 2017, with equity derivatives the only area of growth. Nor do investment banking divisions (equity capital markets, debt capital markets and M&A) offer any solace: Buckingham thinks IBD revenues were also down in double digit percentage terms in the third quarter.
If you work in rates trading, credit trading, or debt capital markets, Buckingham's figures look particularly ominous. Last week, financial research firm Coalition said revenues fell year-on-year in these business areas in the first half of 2018. - The third quarter has simply compounded the pain.
All of this looks a little ominous given that most banks already have cost-cutting plans and some have revenue growth plans which were already looking unreasonable at the end of the first half.
Thanks to the unexpectedly limp performance in July and August, Mitchell says he's now expecting a 15% decline in banking revenues in the third quarter (compared to an expected decline of 5% previously), and that banks will issue negative guidance in the coming weeks. Revised cost-cutting plans may yet follow.
(Hover over the charts to highlight the percentages.)
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