Growth In European Bank Fee Earnings Stagnates With 1% Annual Growth Rate Since 2008

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Includes: BAC, BNKD, BNKO, BNKU, BNKZ, CS, EUFL, EUFN, GS, JPM, KNAB, MFG
by: HedgeThink
Summary

European banks earned a combined US$ 13.3 billion worth of investment banking fees globally during the first six months of 2019.

JPMorgan tops global investment banking fee rankings for first half of 2019.

However, all but one of the top twenty banks have seen a fall in fees compared to first half of 2018.

During the first six months of the year, European banks earned a combined US$13.3 billion worth of investment banking fees - down 14% from this time last year, which makes it the lowest first half-year level since 2016, according to analysis by Refinitiv. In the first six months of 2016, European banks, in comparison, earned US$12.4bn in fees. American banks earned US$25.5 billion - down 12% from H1 2018. In comparison, Asian banks earned US$11.4 billion in the first six months of 2019 - an increase of 3%.

Asian banks saw a huge growth in fees over the last decade with a 13% average annual growth rate. This compares to 5% in the Americas while European banks saw a mere 1% of growth during this period.

Lucille Jones, Deals Analyst at Refinitiv comments: "While European banks have seen steady, consistent fee earnings over the past decade, they haven't seen the fee growth and recovery post-financial crisis that banks in other regions have enjoyed."

European stake in global investment banking fee pool falls as Asian stake doubles

Since 2009, European banks' share of the global investment banking fee pool has fallen from 39% to 26% - a drop of 13% and the lowest first-half share since our records began in 2000.

American banks have consistently shared around half of total first-half global investment banking fees earned over the last decade - rising slightly from 49% to 51%. Asian banks' have nearly doubled from 12% to 23% since 2009.

Top investment bank fees fall across the board in 2019

All but one of the top twenty banks have seen a fall in investment banking fees compared to H1 2018, with half of the banks seeing double-digit percentage declines. JPMorgan (NYSE:JPM) earned the most in fees in H1 2019 with US$3.3bn. They were followed by Goldman Sachs (NYSE:GS) on US$3.1bn and Bank of America Merrill Lynch (NYSE:BAC) on US$2.5bn. Credit Suisse (NYSE:CS) was the highest-earning European bank on US$1.7bn while the highest-earning Asian bank was Mizuho Financial Group (NYSE:MFG) on US$964m.

Asian banks climb up the global ranking from 2009

Four of the seven highest fee earning European banks have slipped down the Global Investment Banking Fee league table from the position they held a decade ago during the first half of 2009. US bulge bracket banks continue to dominate, maintaining a hold on the top five positions. Banks in Asia show a strong positive movement up the rankings.

Lucille concludes: "While European banks have seen three consecutive quarters of positive fee growth, we have seen a slow start to the third quarter of 2019. European banks' share of the global investment banking fee pool was just 21% during July, the lowest monthly share since our records began in 2000."