In a report published Monday, Deutsche Bank AG (ETR:DBK) (FRA:DBK) (NYSE:DB) research analyst, Matt O’Connor, CFA, lowered Q4 earnings per share estimates for market sensitive U.S. banks, mainly composed of large cap giants. Among the banks that had their Q4 EPS lowered were Bank of America Corp (NYSE:BAC), Citigroup Inc. (NYSE:C), JPMorgan Chase & Co. (NYSE:JPM), Morgan Stanley (NYSE:MS), and Goldman Sachs Group, Inc. (NYSE:GS), among others.
The analysts highlighted capital market trends across equities, fixed income/credit and investment banking, noting that capital markets revenues are already lower than initially expected, despite having covered more than half of Q4. “Given this, we are tweaking down our 4Q estimates for the market sensitive banks by about 10% on average,” the analysts wrote.
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Fixed Income Clearing Corporation (FICC) Trading is down 15% quarter-over-quarter (median) overall, and 53% up year-over-year. Citigroup Inc. (NYSE:C) registered the highest quarter-over-quarter decline, with a fall of 25%, while Morgan Stanley was down 10%. Citi leads the charts for year-over-year growth rate with 71%, while Morgan Stanley (NYSE:MS) languishes with 5%.
Goldman Sachs Group, Inc. (NYSE:GS) posted the highest decline in Equity trading, which fell by 14% quarter-over-quarter, while Citi topped the year-over-year trend with 42% growth.
In the investment banking (i-banking) fees unit, Citigroup Inc. (NYSE:C) remains the best among all the market sensitive banks, with a decline of 8% quarter-over-quarter, as compared to the median of 10%. Moreover, Citi still leads the charts for the year-over-year trend with a growth rate of 31%, followed by Goldman Sachs Group, Inc. (NYSE:GS) at 25%.
Overall, Citigroup Inc. (NYSE:C) boasts a growth rate of 66% year-over-year for its trading business. However, it reported a decline of 23% quarter-over quarter. Morgan Stanley (NYSE:MS) reported the sleekest decline of 10%, below the median of 14%, but was poorest in the year-over-year trend with a decline of 4%; all the other banks had a positive growth rate year-over-year.
This trend is maintained for the overall capital markets performance for companies, with Citigroup Inc. (NYSE:C) up 57% year-over-year, but down 21% quarter-over-quarter, followed by Bank of America Corp (NYSE:BAC) at 33% growth, and a 14% decline.
However, the worlds largest bank by assets, JPMorgan Chase & Co. (NYSE:JPM), leads the charts in investment banking revenue growth rate, with 50% quarter-over-quarter growth, while Citi reported the least with just 34%. Nonetheless, Citi still maintains its leadership on the year-over-year trend, with a decline of just 1%, as compared to Bank of America Corp (NYSE:BAC)’s decline of 15%.