DISCLOSUREAPPENDIXATTHEBACKOFTHISREPORTCONTAINSIMPORTANTDISCLOSURES,ANALYSTCERTIFICATIONS,LEGALENTITYDISCLOSUREANDTHESTATUSOFNON-USANALYSTS.USDisclosure:CreditSuissedoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethattheFirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.3January2019Americas/UnitedStatesEquityResearchMultinationalBanksBankingontheMarketsMONTHLYResearchAnalystsSusanRothKatzke2123251237susan.katzke@credit-suisse.comAdamKrasner,CFA2123257116adam.krasner@credit-suisse.comGerardPadilla2123253579gerard.padilla@credit-suisse.comThat’saWrapon'18—MacroConfidenceCriticaltotheForwardLook■Theyear2018startedstrongbutendedonaweakernoteaslatecycle/macroconcernstookholdofsentiment.Whatweobserved…increasedvolatilityand,withthat,amaterialincreaseintradingvolume,bothequitiesandfixedincome.Butthisvolumecamewithamaterialdeclineinassetpricesandadiminishedlevelofinvestorriskappetite.Wereducedourexpectationsfortrading(fixedincomeinparticular),investmentbankingandassetmanagementrevenueinlateDecember;thestocksseemtodiscountatleastthismuchweakness.Wheretofromhere…themacroenvironmentandwiththat,confidence,riskappetiteandassetpricesupport,remaincriticaltoaconstructivecapitalmarketsrevenueforecast.■InvestmentBankingwasweakerwithfeesdown13%yr/yranddown7%qtr/qtrforthefourthquarter;underwritingdraggeddowntheaggregate;M&Afeeswereup27%yr/yrand23%qtr/qtr.AnnouncedM&Awasdown;thatpluscompletionshavedriventhebacklogdown31%sequentially(thisdoesnotbodewellforrelatedrevenuegenerationin1H19).SeeFigure1.Figure1:InvestmentBankingandTradingRevenueIndicators,4Q18Yr/YrQtr/QtrYr/YrQtr/QtrInvestmentBankingFees:Equitiesprices(eop):ECM:S&P500-6%-14%Equityunderwriting-36%-18%MSCIWorldindex4%-13%IPOfees-30%4%FixedIncomeprices(eop):High-gradecorporates-5%1%DCM:Highyieldcorporates-9%-7%Debtunderwriting-37%-30%Equitestradingvolume&volatility:Loan...
