Where Goldman Sachs, JPMorgan, Citi and BAML outperformed last year. And where they didn't
As performance metrics go, straightforward revenue growth is somewhere on the very blunt end of the spectrum, having been surpassed in recent years by more nuanced alternatives like returns on capital invested. This week, however, JPMorgan CEO Jamie Dimon seemed to set straight-up revenue growth on the route to rehabilitation. - As long as JPMorgan is gaining or maintaining market share in its sales and trading business it's all fine, said Dimon on the bank's investor call. In light of market share stability of gains Dimon said he "honestly couldn't care less," about some weakness in the final month of the final quarter.
This being so, we'd like to draw your attention to the charts below, which plot the revenue growth in each bank's equities sales and trading, fixed income currencies and commodities sales and trading, M&A advisory and debt and equity capital markets (DCM and ECM) divisions between the fourth quarter of 2017 and the fourth quarter of 2018, and between 2017 and 2018 as a whole.
The best and worst performing businesses at Bank of America Merrill Lynch
Bank of America Merrill Lynch didn't have a great year in 2018. As the first chart below shows, it lagged its peers in every single area. - When there was growth, BAML grew by less. When there was shrinkage it shrank by more. The worst performing business for the year as a whole was clearly M&A, where the problems have been well-documented and are being addressed. BAML's best performing division was equities sales and trading, where revenue growth of nearly 18% in 2018 was nearly on a par with the average across the four banks listed.
BAML made up some ground in the fourth quarter. Although its ECM, DCM and fixed income trading businesses shrunk, they did so by less than the market average - suggesting that the bank gained market share.
The best and worst performing businesses at Citigroup
Citi was more of a mixed bag last year. While the bank's equity capital markets division was the worst in this particular class in terms of full year revenue growth, its M&A and equities sales and trading businesses were among the best. Year-on-year revenue growth in ECM continued to lag competitors in the final quarter for Citi, while fourth quarter revenue growth in the bank's equities sales and trading and M&A businesses was above the market average.
The best and worst performing businesses at Goldman Sachs
At Goldman Sachs both the equity capital markets (ECM) business and the fixed income sales and trading business grew far faster than the market average last year, suggesting the firm seized market share in both areas. The firm also out-performed in M&A and DCM (where it shrunk less than the average). By comparison, Goldman's equities sales and trading business lost ground in 2018 as a whole.
In the final quarter, Goldman lost share in both ECM and DCM compared to the last quarter of 2017. However, it gained in M&A.
The best and worst performing businesses at JPMorgan
JPMorgan's best-performing businesses last year was M&A, where its revenue growth was 1,100 basis points higher than the market average. JPMorgan also gained share in ECM, equities and fixed income trading last year, whilst losing share in DCM.
In the fourth quarter, JPMorgan gained share in M&A, ECM, DCM and fixed income trading, whilst maintaining its position in equities. - An almost flawless performance compared to the same period of 2017.
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