What are the chances that 2021 will turn out to be a bumper year for finding a new job at an investment bank? For the moment, the signs are reasonably positive.
In a summary of statements made by the CFOs of Citi, JPMorgan and Morgan Stanley at conferences this week, analysts at KBW suggest the tone was overwhelmingly positive. Yes, the comparables for last year are going to be tough, and yes things often get more difficult from March onwards, but so far there's reason for optimism.
Citi sees continued strength in its investment banking division, says KBW, with good momentum in equity capital markets, such that revenues are expected to be up in the high teens to low 20s in percentage terms.
Morgan Stanley said M&A activity is robust and CFO Jonathan Pruzan said it will likely remain high. Healthcare and tech are particularly active, said Pruzan, and there could also be activity in challenged industries as the vaccine creates a path to recover. Pruzan also pointed out that dry powder at private equity firms and the rise of SPACs should continue to drive M&A. "Overall pipelines are healthy, and he expects that to continue for a while," say KBW's analysts of Pruzan's presentation.
At JPMorgan, CFO Jennifer Piepszak reportedly said that investment banking revenues are likely to be flat on the elevated levels of the fourth quarter in the first quarter of 2021. ECM is the driving force.
In terms of sales and trading (markets) revenues, Piepszak reportedly said revenues are up "meaningfully" year-on-year and that equities are doing better than fixed income. Pruzan said that trading activity in the first six weeks of the year has been "very strong" and more like 2020 than 2019. However, Mark Mason, CFO of Citi, said markets revenues are likely to be down in single digit percentage terms year-on-year in the quarter....
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