Transaction advisory, equity, and debt underwriting helped banks (XLF) garner strong investment banking revenues in 2017. Consolidation in industries such as telecom, real estate, and expansion in other major sectors have pushed for joint ventures as well as mergers and acquisition (or M&A). A major portion of fees originated from equity and debt underwriting in support of expansion plans.
In 2018, fundraising through debt and equity can take a hit as valuation concerns and higher rates can slow down some corporate and investor engagement in these markets. However, good quality paper would still command a better price and raise capital. M&A activity can gain strength in select sectors such as the oil and gas industry and the telecom sector.
J.P. Morgan (JPM) maintained its top position in the investment banking business in 2017, reflecting its strong, diversified presence and its diverse pool of bankers. The bank posted 4Q17 net revenues of ~$7.5 billion in its Corporate and Investment Banking segment, which represents a decline from $8.5 billion in 4Q16. The division’s banking revenues grew 10.0% to ~$3.1 billion on underwriting revenues, deposits, rate margins, and fees.
Bank of America’s (BAC) ranked third in terms of wallet fees, reflecting its strength in core banking, adoption of technology, asset management, and trading platform businesses. Citigroup (C) has also pushed for its advisory in equity and debt underwriting activities.