Lessons From US Banks: Better For Equity Houses (MS, UBS), Outlooks Muted

So what did we learn from Friday’s US bank reporting: few surprises but outlooks remain relatively muted. Appears more positive for UBS & MS over the remaining global banks, in our view.

• Key credit metrics: generally improved slightly. CET1 ratios were marginally firmer at both big banks. JPM’s credit and non-performers were broadly stable whilst Citi saw a weaker trend.
• IB revenues: the key investment banking lines were broadly stable. FICC was down 8% (Citi weaker) with equities flat-to-up. ECM and DCM both recovered strongly but M&A advisory remains in the doldrums. So a stronger lateral for the more equity-linked peers (UBS and Morgan Stanley, mainly).
• Outlooks: JPM’s revenue guidance disapponited equity investors with the US rate tailwind seemingly blowing out more quickly than some had hoped for. Citi saw a marginally more positive outlook (likely from its overseas banking businesses) but for both, the organic business outlook appears relatively muted.