Structural changes in securities businesses to lead to ongoing pressure on revenue

Despite typically low volumes in the summer, the major Wall Street banks may see an improvement in third quarter sales and trading revenue, says Fitch Ratings.

In a new report, the rating agency suggests that revenues for the 12 global trading banks likely declined from the second quarter, given seasonally low trading volumes. However, it says that a pick-up in market volatility in September could result in better overall performance compared with the same quarter in 2013, when the banks’ performance was generally weak.

That said, Fitch also notes that it expects structural changes in securities businesses to lead to ongoing pressure on revenue for the banks. And, it says that potential rate increases in the U.S. could eventually result in changed investor behaviour.

“Conduct risk will remain a priority” for these major Wall Street firms, it adds, noting that it expects banks to make further provisions in the third and fourth quarters.