Third quarter earnings have so far been characterised by solid retail and private banking and asset management performances, coupled with a hammer blow to investment banking. Within those divisions, sales and trading are the problem. Client flows have dwindled as higher confidence levels failed to translate into market action in an increasingly risk-averse world.
The good news is that fixed income has tended to hold up pretty well, and the equities decline is at least partly seasonal.
But there’s a wider structural issue at stake, with ever-increasing competition for the available commission coupled with growing concern over a decline in the appetite for securitisation – witness, as an example, the US housing foreclosure ruckus affecting demand for residential mortgage-backed securities. It’s looking like a tough old world out there indeed.