Bloomberg前瞻：Q3固收交易走弱或拖累欧洲投行，法兴FICC收入预计领跌10%

Wall Street’s fixed income weakness in the third quarter bodes badly for European banks, as they too grapple with rising interest rates

“I can’t see why it’d be any different in Europe,” Bloomberg Intelligence analyst Philip Richards said. “We’re in exactly the same boat in terms of rates going up, soaring uncertainty, and actually I’d say, it’s worse over here with what’s going on in France.”

Societe Generale SA’s fixed income and currencies revenue is expected to have plunged 10% in the third quarter, the biggest dip among Europe’s investment banks, Bloomberg-compiled estimates show. Deutsche Bank AG, BNP Paribas SA and UBS Group AG are all set to report a fall in fixed income revenue, with Barclays Plc the exception.

This would echo their US peers, which saw trading revenue from their fixed income desks drop by 5% on average, with Goldman Sachs Group Inc. citing “significantly lower net revenues in mortgages and credit products.”

JPMorgan Chase & Co. posted its first year-on-year decline in fixed-income, currencies and commodities revenue in more than two years while Morgan Stanley had its second-worst quarter in three years.

Bank of America Corp.’s 17% slump was by far the steepest, more than three times the group’s average. Only Citigroup Inc. bucked the trend.

Bond trading desks face a tougher backdrop as elevated interest rates weigh on debt issuance. In the US, uncertainty over the Federal Reserve’s next moves is also making some clients reluctant to take big positions. Renewed inflation concerns have further clouded the outlook for rates.

Bond market volatility is only set to worsen as worries grow over France’s finances, with the country’s debt crisis evoking the specter of contagion across Europe. That puts French lenders – SocGen, BNP and Credit Agricole SA – in the spotlight as key holders of French government securities.

And while US banks can rely on equities to offset softness in fixed income, European lenders are less able to do so. The likes of Barclays and SocGen failed to replicate Wall Street’s blowout second quarter in equities trading, raising the prospect of third-quarter weakness across the board for European investment banks.

UBS looks “relatively well positioned” given its limited credit exposure and greater weighting toward currency trading, which has emerged as a brighter spot within FICC, KBW analysts Thomas Hallett and Andrew Stimpson wrote in a note. BI’s Richards sees Barclays as a potential standout, though notes that the scope for a decisive beat is small.

Barclays and BNP Paribas declined to comment in the quiet period ahead of earnings. SocGen, Deutsche Bank and UBS did not respond to a request for comment.

Barclays reports Oct. 22, followed by UBS, Deutsche Bank and BNP Paribas on Oct. 28 and SocGen on Oct. 29.

Going forward, the outlook is darkening for the region’s biggest lenders, as the global bond selloff revives memories of the 2012 sovereign debt crisis and stubbornly high oil prices stoke inflation concerns.

“We just see so many risks everywhere we look: sovereign exposures, fiscal positions collapsing across Europe,” BI’s Richards said. “I’m certainly not calling the bottom of the trouble in the fixed income market, because it looks like it might stay.”