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Wall Street’s big banks are poised to report improved first-quarter earnings, driven by a surge in revenues from investment banking, says Moody’s Investors Service.

The big U.S.-based global investment banks, including Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley and Wells Fargo & Co., will begin reporting first-quarter earnings on Friday.

In a new report, the rating agency said it expects the banks to announce stronger earnings as investment banking revenues are up significantly from the same quarter a year ago.

“Debt issuance increased across the board and equity follow-on issuance tipped multi-year highs, which should boost investment banking revenue from a year ago,” it said.

Alongside the strength in secondary offerings, “equity capital markets revenue is likely to also benefit from greater convertible bond market activity,” Moody’s said.

On the debt side, high-yield issuance was up in the first quarter, “building on momentum gained last year that likely reflected tighter credit spreads, more clarity around monetary policy and a better-than-expected economic outlook.”

Investment-grade debt issuance was strong too, “with bond and loan issuance volume both increasing sequentially and year on year,” Moody’s reported.

However, the initial public offering market remained weak in the first quarter, and merger and acquisition activity was flat year over year, it noted.

Revenues from trading are also expected to be lower, Moody’s said, despite strong trading volumes in both the equity and fixed-income, currencies and commodities segments.

“Although strong volumes indicate high client activity, lower volatility points to weaker trading results than in the strong [first quarter of] 2023,” it said.

“Volatility and spreads are positively correlated and can boost revenue for banks that are able to navigate the markets and provide liquidity. In contrast, lower volatility and spreads generally reduce trading revenue,” the report said.

Beyond Wall Street, some of the big banks’ European rivals are likely to have more muted first-quarter results, suggested Fitch Ratings in a separate report.

It noted that a couple of the big European firms, including UBS and Deutsche Bank, are still undergoing restructurings, and the relative strength of the U.S. economy compounds U.S. banks’ structural advantages, it said, “while muted growth in Europe weighs on European peers.”

Additionally, the Wall Street firms, “which have stronger [equity capital market] franchises, are best-positioned to benefit from a recovery if improved market sentiment translates into higher business volumes,” Fitch said.

And, even while market volatility is low, higher equity prices should have boosted fee revenues at the firms with large wealth management businesses, it said.

Finally, Fitch noted that the “growing private credit market represents a rising source of revenue for banks that view this business as compatible with their risk policies,” with U.S. giants JP Morgan and Goldman Sachs leading the way.