Sell-side fixed income, currency and commodities (FICC) revenues saw growth of 15% in the first quarter of 2021, according to new research by analyst firm Coalition Greenwich, driven primarily by exceptional performance in spread products and commodities which increased significantly due to sizeable trading gains and increased client activity. This was partially offset by lower revenues in G10 rates and FX, which saw some normalisation compared to a strong 1Q20.
In G10 rates revenues normalised from exceptional trading conditions seen in Q1 2020, both in flow rates and financing. This was partially offset by lower XVA charges in Q1 2021 and gains in UST-sell-off.
Flow credit revenues continued to grow from Q4 2020 in investment grade (IG) and high yield (HY) trading driven by tightening spreads and strong client activity, while distressed credit normalized. In Structured Credit, revenues normalized from underperformances in CLO Trading seen in 1Q20. EM Credit revenues increased compared to 1Q20 and were driven by increases in financing activity and one-off trading gains for certain banks.
Revenue growth in municipal bonds was primarily driven by a rebound from secondary trading losses incurred in Q1 2020 along with higher primary issuance activity.
Headcount in FICC fell by 1%, continuing a decline seen since Coalition Greenwich stared reporting in 2016.
Debt capital markets business saw an increase in revenues driven by positive bond underwriting performance across IG and HY coupled with improvement in loan syndication activity towards the end of Q1 2021.
Equities revenues reached one of the highest quarterly revenues in a decade, excluding Archegos losses. Equities performance was bolstered by significant increases in equity derivatives, especially structured products, improvement in cash and normalisation in Delta One revenues. However, strong performance in equity revenues was offset by the losses from the Archegos hedge fund collapse in prime services and cash.
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