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JPMorgan analyst Kian Abouhossein forecast revenue for major
investment banks, including Morgan Stanley, Deutsche Bank and
Barclays, would fall 19 percent on average in July-September
from the second quarter.
He predicted an 18 percent drop in fixed income, currencies and
commodities (FICC) revenues, a 20 percent fall in equities
trading and a 17 percent decline in advisory and investment
banking fees.
Some market volatility can boost investment banks' revenue by
increasing trading activity in foreign exchange, equities, and
other products, but concerns about China's economy have led to a
spike in volatility and stormy global financial markets in
recent weeks that could hurt income.
"Recent strong turnover, especially in equities could decline
materially once markets settle –- not just in Asia but
globally," Abouhossein said in a note for clients.
He said potential defaults could impact spread levels and client
activity in credit trading, while volatility could impact deal
completion for the rest of this year in advisory and
underwriting activity.
Abouhossein cut his earnings per share forecasts for the banks
by 2-3 percent on average for 2015-17.
(Reporting by Steve Slater; Editing by Keith Weir)
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