The devastating coronavirus outbreak left a huge mark on the global banking industry, causing significant drops in banks` market capitalization and cutting their profits in the first months of 2020.
However, the frenzied trading around the COVID-19 crisis helped the world’s largest investment banks boost their trading and investment banking revenues and to better position themselves in times of economic uncertainty.
According to data presented by StockApps, the global investment banking revenue hit $56.1bn in the first week of September, a 9% jump year-on-year.
JP Morgan, Goldman Sachs, and BofA Securities Generate 25% of Global Investment Banking Revenue
Before the coronavirus pandemic, the investment banking industry witnessed a slowdown. Trade tensions, slow growth, and low-interest rates cut revenues to $77.8bn in 2019, a 3% drop year-on-year.
However, 2020 witnessed a boost in investment banking revenues as the world’s largest banks focused on trading and investment activities amid unprecedented stock market volatility. Those with a higher proportion of investment banking and trading divisions managed to position much better than traditional lenders in the time of crisis.
Analyzed by region, the US banks witnessed the most significant growth, with their investment banking profits reaching $30.1bn in the first week of September, a 12% jump year-on-year, revealed the Wall Street Journal and Dealogic data. The Asian investment banking market also increased by 12% year-on-year to $7.4bn in revenue. European investment banks follow with a 7% year-on-year increase to $11.6bn in revenue in September.
As a market leader, JP Morgan gained a 9.5% market share in September, a 0.4% increase year-on-year. The total investment banking income of the US giant rose by more than $640m compared to the same period in 2019.
Goldman Sachs Group Inc, the second-largest investment bank globally, hit $4.6bn in investment banking revenue last week and an 8.3% market share. Statistics show the New York-based financial giant increased its investment banking profit by $700m year-on-year.
As the third-largest investment bank globally, BofA Securities reached over $4bn in total investment banking revenue and a 7.1% market share in September, a significant increase compared to $3bn profit and a 5.9% market share in the same month a year ago.
Statistics indicate the world’s three largest banks generated one-quarter of the global investment banking revenue from January to September, with a combined market share of almost 25%.
Financial Institutions as the Leading Field of Investment Banking Services
An investment bank’s key role is to help companies and governments raise capital from investors, like pension funds or other money managers. The banks take the role of the underwriter, making sure bonds or stocks are competitively priced and sold. Investment bankers also help clients manage mergers and acquisitions.
Analyzed by sector, financial institutions represent the leading field for investment banking services with $12.6bn in cumulative revenue in the first week of September. Technology ranked as the second-leading industry, with $8.5bn profit in the first nine months of 2020. Healthcare, Industrials, and Energy and Natural resources follow with $7.4bn, $7.1bn, and $5.5bn profit, respectively.
The statistics also indicate that JP Morgan represents the leading bank in seven out of ten investment banking sectors. Goldman Sachs ranked as the top investment banking service provider in the fields of industrials, and communications, media, and entertainment.