Capital markets results to help U.S. banks’ Q3 revenues: Fitch

High debt levels threaten banks’ strong results: Fitch U.S. action on climate benefits banks, asset managers: Moody’s During the third quarter, trading volume has likely remained soft, but strong debt issuance has boosted underwriting revenues significantly, it says. “Despite lingering global economic uncertainty, debt issuance volume has surged in response to contracting spreads over benchmark rates and very low absolute borrowing costs,” it notes. Apart from the recovery in debt issuance, Fitch says that the merger and acquisition business remains sluggish, and it expects continued weakness in equity underwriting. It also says that fixed income, currencies, and commodities (FICC) trading revenues will likely recover somewhat, as some easing in eurozone concerns has boosted trading volumes. Additionally, Fitch says it expects banks to benefit from easy comparisons with a dismal third-quarter 2011 trading environment. Looking to the fourth quarter, Fitch says it remains focused on the potential for global economic concerns — including events in the eurozone, the looming U.S. fiscal cliff, and slowing growth in Asia — to fuel uncertainty in the capital markets. Also, fourth-quarter results are generally affected by the holiday slowdown, it says. “As a result, volatility in large banks’ capital markets revenue results is likely to continue,” it concludes. Keywords Banking industry Related news James Langton Share this article and your comments with peers on social media G7 tax pledge may be upstaged by CBDC work A recovery in capital markets is likely to drive improved third quarter revenues for the major U.S. banks, Fitch Ratings says in a new report. However, it doesn’t expect the rebound to last. The rating agency says that capital market revenues at the big banks are on track to rebound from their weak showing in the second quarter, “when thin trading volume, an equity market sell-off, and poor execution on the Facebook IPO weighed on revenues.” Facebook LinkedIn Twitter read more