DBRS Morningstar: Capital Market Revenues for European Firms Remained Strong In Q3

In Q3 European firms with capital market activities continued to see strong growth in Sales and Trading (S&T), with Equities S&T revenues growing again after two quarters of contractions. Particularly notable was the growth in Equity underwriting revenues on the back of strong IPO activity, and Debt underwriting revenues also showed good growth although more muted than in Q2. Advisory revenues remained under pressure, mirroring the trend seen in previous quarters. This commentary focuses on the performance of the capital markets divisions (including Sales & Trading, Underwriting and Advisory) of the major European firms in Q2 2020.

Key highlights from DBRS Morningstar’s commentary include:
• European firms’ Q3 capital market revenues remained strong, supported by good growth across all products except Advisory.
• Equity revenues from Sales & Trading and Underwriting were the key growth drivers this quarter.
• Provisions for credit losses were low and significantly below the previous two quarters.

“During Q3 we continued to see elevated levels of volatility driving strong client activity and growth in S&T revenues. High levels of volatility have contributed to revenue growth in the first three quarters of 2020, and this is something that seems to be continuing through the start of Q4. However, revenue growth rates in Q3 were lower than those seen in an exceptional Q2, and therefore we could expect revenue growth rates to remain at this lower level in Q4.” said Maria Rivas, Senior Vice President from the DBRS Morningstar Financial Institutions team.

The commentary focuses on the Capital Market results of global banks. The full commentary “Capital Market Revenues for European Firms Remained Strong In Q3; Lower Loan Loss Provisions” is available at www.dbrsmorningstar.com.