Fitch: U.S. Banks Report Weaker Capital Markets Results

Capital markets revenues for the five U.S. global trading and universal banks (GTUBs) for the second quarter of 2014 (2Q'14) were negatively impacted by a generally lackluster trading environment, which resulted in subdued client activity, according to Fitch Ratings. Lower quarterly revenues in trading of fixed income, currency and commodities (FICC) offset improvements in underwriting revenues.

FICC revenues for the five U.S. GTUBs have been on a structural downward trend, primarily due to newly imposed regulations, such as the Volcker Rule. Despite weakness, FICC continues to remain a significant earnings driver. If the downward trend continues, earnings from capital markets will continue to be weak. During 2Q'14, FICC revenues were particularly affected by subdued client activity.

Fitch believes that FICC revenues in the near term will remain challenged due to the evolving regulatory landscape and economic conditions. New rules on capital will continue to impact FICC revenues. However, equity market revenues should pick up with higher volatility and volumes. M&A revenues should be strong reflecting the completion of previously announced deals.

For further commentary, the report 'U.S. Banking Capital Markets Update: 2Q14' is available at 'www.fitchratings.com.' The report is confined to the five large U.S. global trading and universal banks (Bank of America, Citigroup, Goldman Sachs, JP Morgan, Morgan Stanley).

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research: U.S. Banking Capital Markets Update: 2Q14 (Weak FICC Results Drive Revenues Lower)

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=753203

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