Banks

Earnings of major global banks set to drop sharply as mergers and acquisitions slow

According to data from Refinitiv, the cumulative net profits of major global banks, including Morgan Stanley, JPMorgan Chase & Co and Citigroup Inc, are expected to decline 2% in the March quarter, compared to cumulative profits in the December quarter.

That would mark their first quarter-over-quarter profit decline since the second quarter of 2020, according to Refinitiv.

Title: Quarterly earnings of the best investment banks,
The

Data covers the top 65 global banks, each with a market capitalization of at least $10 billion or more.

Analysts said lower fee income and trading losses due to market volatility triggered by the Ukraine crisis are likely to hurt first-quarter earnings, despite an overall rise in net interest income levels.

“Market volatility can make it more difficult to issue stocks and debt, reducing revenue for those industries that focus on underwriting new stocks and bonds as their main source of income,” said Andrew Dinnhaupt. , a portfolio manager at Franklin Templeton, in a bond this month.

“That could weigh on corporate results, even as their traditional banking operations benefit from higher (net interest income) and faster loan growth.”

According to data from Refinitiv, the total value of pending and completed deals announced in the first quarter hit $922 billion as of Tuesday, the lowest level since the second quarter of 2020.

Title: Global Mergers and Acquisitions – Quarterly Volume,

The number of deals for which Citigroup acted as bookrunner fell 47% from a year ago, while those involving BoFA Securities Inc and JP Morgan Chase fell 39% and 36%, respectively.

Title
: Fall in the value of M&A transactions by bookrunner in the first quarter of 2022),

Global equity issuance trading volumes fell to $129 billion in the first quarter from $390 billion in the fourth quarter of 2021, according to Refinitiv, as the initial public offering market virtually stalled.

Equity trading volumes fell 80% for Morgan Stanley and Goldman Sachs, the two most dominant IPO financial advisers in the world.

Title: Worldwide Action Missions – Quarterly Volume,

Bill Fink, head of U.S. middle market banking at TD Bank, said merger and acquisition activity declined in the first quarter due to heightened uncertainty over the Ukraine-Russia conflict, supply chain disruptions supply and rising inflation.

“Together with the prospect of the Fed raising rates beyond the number of times it originally planned, you have a recipe for uncertainty – and the M&A market doesn’t like it.” not uncertainty, because it impacts buy multiples and ultimately the buy price,” he said.

In February, Citigroup said its total exposure to Russia was nearly $10 billion, following questions about the need to set aside funds to cover potential losses.

The

major US banks are expected to kick off the earnings season from April 13.

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Main

investment banking quarterly profits

Global mergers and acquisitions – quarterly volume

global equity missions – quarterly volume

Decrease in the value of M&A transactions by bookrunner in the first quarter of 2022)

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