Research by analyst firm Coalition has found investment banking revenues reaching a five-year high in the first quarter of 2020, while headcount dropped significantly, leading to far higher productivity than ever before amongst sell-side front office staff. Growth was led by gains in the fixed income, currencies and commodities (FICC) business primarily driven by macro products. Within equities, derivatives and cash business improved while both equity and debt capital markets support growth in investment banking divisions.
FICC revenues increased 20% over Q1 2019 to hit US$22.7 billion, reaching their highest Q1 since 2015, driven by high client activity and volatility across all macro products, while spread products declined.
• G10 Rates: significant improvement in flow products, increased demand in structured and one-off trading opportunities in the US;
• G10 FX: improvement in all sub-products;
• EM Macro: recorded higher trading volumes and improvement in margins;
• Spread Products: robust revenues in investment grade credit were offset by declines in distressed and structured credit; in addition securitisation and municipal bond revenues were lower for the quarter.
FICC headcount dropped by 6%, while equity headcount dropped by 10% comparatively. As a result of the increased revenue and falling headcount, efficiency per front-office professional increased, most significantly in FICC where it reached its highest level since 2014, breaking past US$1.3 million per full-time-equivalent employee.
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