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Top 10 investment bank revenues rise in Q3: survey

[LONDON] Banks' financial trading revenues rose in the third quarter thanks to an increase in market volatility, but the rise was not enough to offset the fall seen in the first half of the year, according to a new survey on Friday.

Trading revenue for the top 10 global investment banks totalled US$36.5 billion in the three months to September, a rise of 11 per cent on the same period a year ago, according to industry analytics firm Coalition.

This was largely driven by a 16 per cent rise in fixed income, currencies and commodities (FICC), which benefited from greater volatility caused by uncertainty over US and European monetary policies and geo-political instability.

Coalition does not break out third-quarter revenues by segment, but said rates and foreign exchange picked up in the three months to end-September.

That marks a change from previous months, when the low interest rate environment together with the effect of tougher regulations forcing banks to hold more capital squeezed returns.

The first half weakness was reflected in year-to-date FICC revenues, which were 7 per cent behind last year, Coalition said.

In equities, revenue was US$9.9 billion, 3 per cent up on last year. Growth came from prime services, as hedge funds, sitting on record assets under management, boosted activity.

Investment banking divisions (IBDs), which underwrite and arrange share issues and other deals, saw revenue climb 12 per cent to US$9.4 billion in the third quarter.

Coalition said the availability of cheap financing had given companies the confidence to pursue deals, while favourable investor sentiment supported stock market listings.

IBD was the only area expected to deliver annual growth. Coalition forecast an 11 per cent rise in full-year revenue at IBDs, while FICC and equities were seen down 4 per cent and 5 per cent, respectively.

Total annual trading revenue will be little changed from the year before at US$152.7 billion.

The data showed that banks' restructuring continued into the third quarter, with headcount down 4 per cent year-on-year. All divisions saw cuts, Coalition said.

Coalition tracks the performance of Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi , Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Morgan Stanley and UBS.