According to C.S. Venkatakrishnan, CEO of Barclays, investment banks will likely experience a change in revenue next year due to a rebound in banking and advisory fees that will cushion the blow from a decline in trading income.
Investment banks have reported strong results this year thanks to a surge in trading, which helped to make up for a bad year for fees on M&A deals and company flotations due to market volatility around the world.
According to the CEO of Barclays, that could start to change by the second half of next year.
"Trading revenue pools will probably shrink a bit and investment banking revenue pools will probably rise. Whether they offset each other I don't know," Venkatakrishnan - known internally at Barclays as Venkat - said at a Bank of America event.
"But I anticipate volatility in the markets continuing at least in the first and second quarter of next year. And so the declining trading revenue pools seasonally adjusted is more likely to happen in the second half of next year."
Venkat predicted that the economy would eventually slow down as a result of a wave of interest rate increases in Britain, where Barclays is based, with another increase anticipated from the Bank of England this week. But he added that he still anticipated that rate increases would benefit Barclays because they would increase its income from lending. He stated that he anticipated all three of the bank's primary business units to surpass 10% return on tangible equity, a crucial metric for banks' profitability, in the upcoming year.
The British government's proposal to cap energy prices would aid those struggling with tight household budgets and boost the economy, but Barclays is less optimistic about the country's future than it is about the US, according to Venkat.
"I think the U.S. economy is showing less signs of weakness," he added.
Venkat also gave an update on a mistake that led to the bank overselling a variety of sophisticated financial instruments in violation of American regulations.
In "relatively short order," Venkat said, the bank will provide more information on the final costs of its so-called rescission offer to buy back the securities.
According to the terms of the rescission offer, by which the bank was required to buy back the notes and compensate buyers, Barclays reported last week that investors had submitted claims for $7 billion of the $17.7 billion in securities they had mistakenly sold.
(Source:www.nasdaq.com)
Investment banks have reported strong results this year thanks to a surge in trading, which helped to make up for a bad year for fees on M&A deals and company flotations due to market volatility around the world.
According to the CEO of Barclays, that could start to change by the second half of next year.
"Trading revenue pools will probably shrink a bit and investment banking revenue pools will probably rise. Whether they offset each other I don't know," Venkatakrishnan - known internally at Barclays as Venkat - said at a Bank of America event.
"But I anticipate volatility in the markets continuing at least in the first and second quarter of next year. And so the declining trading revenue pools seasonally adjusted is more likely to happen in the second half of next year."
Venkat predicted that the economy would eventually slow down as a result of a wave of interest rate increases in Britain, where Barclays is based, with another increase anticipated from the Bank of England this week. But he added that he still anticipated that rate increases would benefit Barclays because they would increase its income from lending. He stated that he anticipated all three of the bank's primary business units to surpass 10% return on tangible equity, a crucial metric for banks' profitability, in the upcoming year.
The British government's proposal to cap energy prices would aid those struggling with tight household budgets and boost the economy, but Barclays is less optimistic about the country's future than it is about the US, according to Venkat.
"I think the U.S. economy is showing less signs of weakness," he added.
Venkat also gave an update on a mistake that led to the bank overselling a variety of sophisticated financial instruments in violation of American regulations.
In "relatively short order," Venkat said, the bank will provide more information on the final costs of its so-called rescission offer to buy back the securities.
According to the terms of the rescission offer, by which the bank was required to buy back the notes and compensate buyers, Barclays reported last week that investors had submitted claims for $7 billion of the $17.7 billion in securities they had mistakenly sold.
(Source:www.nasdaq.com)
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