Heightened market volatility may be unsettling to investors, but it is boosting revenues on Wall Street, according to Fitch Ratings.
In a research note, the rating agency reports that volatility in currencies, commodities and equities drove a 48% quarter-over-quarter increase in capital markets revenue for the five largest U.S. banks in the first quarter.
“J.P. Morgan and Goldman Sachs benefited significantly from the volatility, allowing them to retain their solid leads in market share,” says Justin Fuller, senior director at Fitch; adding that Bank of America, Morgan Stanley and Citigroup continue to trail the Street’s leading firms.
At the same time, Fitch also reports that advisory revenues also remained strong for the big banks in the first quarter. It says that overall advisory revenues increased 22% from the prior quarter, and that they were up by 45% from a year ago, as the M&A environment remained strong.
And, it believes that this trend will continue for the next several quarters. “With backlogs still robust, Fitch expects advisory will continue to a bright spot through end-2015,” it says.
Other aspects of the business, namely mortgage and credit products were relatively weak in the first quarter, Fitch notes.