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Business by business, this is how well each US bank has really performed when DVA is eliminated

Banks’ third quarter results are not what they seem. As the Financial News points out this morning, when the effects of DVA (debt valuation adjustment – or the gains from the reduced cost of buying back banks’ own debt) are eliminated, US banks’ ‘cumulative pre-tax profits’ disappear entirely and their revenues fall by a third.

Banks don’t volunteer their historical revenue figures without DVA, making it difficult to ascertain precisely how well they’re performing. Fortunately, therefore, Nomura analyst Jon Peace has produced clean revenue figures for the US banks that have reported so far.

The results, shown below, are mixed. In the first nine months, there’s been a stand out good performance in Morgan Stanley’s equities business, but this hasn’t been carried across elsewhere. Citigroup and JPMorgan have taken share from Goldman Sachs in FICC, but Goldman’s held its ground in equities and M&A/underwriting. Citigroup’s equities business looks particularly depressing – particularly as it did a fair amount of hiring here in Europe last year.


Clean revenues, equities, year-to-date vs. same period of 2010

Bank of America: $3bn, down 8.2%

Citigroup: $2.2bn, down 25%

Goldman Sachs: $6.4bn, up 5.2%

JPMorgan: $3.6bn, down 2.4%

Morgan Stanley: $4.9bn, up 29%

Average change ytd: +2.5%


Clean revenues , fixed income, currencies and commodities (FICC), year-to-date vs. same period of 2010

Bank of America: $7.5bn, down 32%

Citigroup: $9.2bn, down 23%

Goldman Sachs: $7.2bn, down 38%

JPMorgan: $9.3bn, down 22%

Morgan Stanley: $4.2bn, down 32%

Average change ytd: -29%


Clean revenues, investment banking and underwriting, year-to-date vs. same period of 2010

Bank of America: $4.2bn, up 9.6%

Citigroup: $2.8bn, up 4.1%

Goldman Sachs: $3.6bn, up 9.2%

Morgan Stanley: $3.4bn, up 22.6%

JPMorgan: $4.7bn, up 8.9%

Average change ytd: +10.6%

Source: Jon Peace, Nomura

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