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Powered by historically strong mergers and acquisitions (M&A) activity, the big Wall Street banks reported robust capital markets revenues in the third quarter, Fitch Ratings reports.

For the five big U.S. banks — Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley — revenues from capital markets rose 18% in the the third quarter.

Fitch noted that global M&A “reached historically high levels” in the quarter, which boosted advisory revenues at many global investment banks.

“The strong revenue performance was generally higher than industry expectations, especially as capital markets revenue had begun to normalize after elevated performance in 2020,” it said.

Market volatility was notably lower this year, and trading revenues were up only a bit from last year, as equity trading revenues jumped but fixed-income trading revenues dropped year over year and were down 13% in the quarter.

Underwriting revenues “remained solid,” Fitch said, despite retreating from their very strong performance in the first half of 2021.

Looking ahead, M&A is expected to remain strong through the end of the year; yet, capital markets revenues are expected to normalize in the long term.

“As corporate demand for investment banking services remains high, revenues are likely to stay elevated over pre-pandemic levels through the end of the year, although when the normalization in corporate transactions will occur is challenging to predict,” Fitch said.

It noted that “the surge in IPOs has begun to slow, and equities market revenues are likely to decline from [first half] highs, in the same way debt markets have quieted from their peak performance in 2020.”