Traders said that in the past few weeks (U.S. Treasury yields have fallen to record lows and the stock market has repeatedly suspended trading due to violations of daily price volatility restrictions), this is the busiest moment they have seen and some counters deal More transactions than the financial crisis. .
Amrit Shanani, director of research at Coalition, the main source of investment data, said: "We expect the stocks and fixed income (sales and transactions) of the 12 (largest) banks in the world to grow by at least 20% to 30% , "Bank revenue.
So far, this is better than public guidance. Citigroup Chief Financial Officer Mark Mason Said On March 11, JPMorgan Chase ’s first-quarter trading revenue will grow "in the middle of the single digits", and JPMorgan Chase investment bank boss Daniel Pinto made the same decision prediction February 25.
An insider at a European bank said that executives usually leave some room in public statements, and Citi's numbers may be 5-10% higher than Mason's comments.
Stocks are expected to increase the most. According to data from the trade association Sifma, in February, the US stock market changed an average of 9.3 billion shares a day, which is the highest trading volume since December 2018. The market turbulence in March was even more fierce. A large U.S. bank says it regularly handles twice its daily daily trading volume in its cash stock trading division.
RBC analyst Gerard Cassidy said: "The amount of equity trading has exceeded the chart, and trading companies' stock trading revenues will reflect this advantage." He recently raised the stakes for Bank of America, Citigroup, Goldman Sachs' first-quarter trading revenue forecasts for Sax, JP Morgan and Morgan Stanley.
Insiders at large U.S. banks say they have been able to win excess business shares because they can use their balance sheets to build markets for customers in the face of tight public market liquidity. Goldman Sachs CFO Stephen Schell Said Earlier this month, his company was already deploying more of its balance sheet.
"We will, as always, provide them with liquidity," said a stock owner in a bank. He added that if the market is not good for them, "rich money" can also help companies like him "get out of trouble."
Bankers say cash transactions are the strongest in the equity space, especially on electronic platforms. Equity derivatives trading is the weakest, suggesting a possible problem for French banks that dominate the sector.
The year-on-year growth in stock income will also be flattered by the poor results in the first quarter of 2019, during which the banking sector's losses fell by 14% (JP Morgan Chase) to 24% (Citigroup).
Fixed income, currency and commodity trading (collectively referred to as FICC) will show more complex performance. According to Sifma data, the bond market transaction volume also surged last month. The average US Treasury bond market volume was 650 billion U.S. dollars, and the average daily trading volume in 2019 was 591 billion U.S. dollars.
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An executive from a global bank said: "If managed properly, fluctuations in interest rates and exchange rate changes are indeed good news for banks." "I suspect that many banks will see a lot of activity in transactions, which will be the whole quarter Quite a long time. "
Barclays analyst Jason Goldberg said banks' fixed-income divisions could also be damaged by the corona virus, as some banks have suffered through their FICC division for bridge loans and other credit instruments loss.
Mr Ryan added that banks will have to mark their fixed-income inventory as market prices at the end of the month, or they could suffer care losses.
The transaction boom is contrary to the expected sharp decline in investment banking revenues, as the costs of M & A activity and IPO expenses have dried up under the uncertainty of the depth of the recession caused by the corona virus.
The bank's core lending business will also suffer collateral losses later this year as new unemployed and newly closed businesses will use the corona virus to pay for holidays and future default opportunities. A sharp interest rate cut aimed at stimulating the economy through a pandemic will also hit banks' profitability.
This year, the KBW Banks Bank of America stock index has almost halved.
Even in the highlights of stock trading, insiders believe the probation obtained from the pain of the coronavirus may be temporary. A stock owner at a large U.S. bank said: "If the world finally deleverages, you will be in deadly calm after the storm." "People won't do anything."
Additional reporting by Philip Stafford and Stephen Morris in London