Revenues at the world's biggest investment banks fell 5 percent to $52 billion in the first quarter of 2011, hit by Middle Eastern unrest, natural disasters, volatile commodities and economic uncertainty, a consultancy said in a report on the industry.
The survey of the world's top 10 banks by London consultancy Coalition attributed much of the decline from a year earlier to an 11 percent slump in revenues from fixed income, the biggest contributor to the banks' earnings.
However, fixed income had 'held up well' given the macro challenges, the report said.
The asset class was the dominant driver of revenues over the last four years and contributed $31 billion in the first three months of 2011.
Performance was impacted by political turmoil in the Middle East and North Africa, natural disasters in Asia, rising inflation and commodities prices, as well as ongoing concerns in Euro periphery countries. Unsurprisingly, therefore, fixed income was the weakest asset class, the report said.
Credit saw the biggest fall in its contribution to total fixed income revenue, down 4 percentage points to 20 percent.
Emerging markets-related revenues in fixed income were 2 percentage points lower than a year ago at 15 percent, following over-valuation and soaring inflation concerns, the report said.
The 'origination' business, which includes fees from mergers and acquisitions and debt and equity capital markets business, saw revenues of $10 billion in the quarter, one billion more than last year.
M&A contributed an extra percentage point making up 26 percent of revenues, benefiting from 'ongoing confidence in the global recovery.'
Debt capital markets remained the 'primary driver' with 47 percent of origination revenues due to 'strong volumes' of high yield issuance, particularly in the Americas.
Equity capital markets were down 1 percentage point from a year earlier, at 27 percent.
Coalition, an independent research firm for the investment banking industry, tracks Bank of America Merrill Lynch
(Reporting by Cecilia Valente, Editing by Chris Vellacott and Jane Merriman)