Kian Abouhossein, the JPMorgan analyst particularly known for his insistence that banks need either to substantially cut pay or substantially reduce headcount to maintain EPS in the current environment, has produced a new report.
There’s nothing about pay and headcount cuts this time. Abouhossein is actually a little optimistic: he still thinks things will be bad, but that they will be less bad than he originally expected.
Based upon his analysis of business performance in the first quarter, here is where you should – ideally – be working, and where you probably shouldn’t.
JPMorgan thinks Goldman’s FICC revenues will increase 31% this year compared to 2011 (versus a market average decrease of 6%).
“We expect Goldman Sachs to outperform Morgan Stanley on all revenue lines,” says Abouhossein. Equities revenues at Goldman are predicted to increase 4% in 2012, versus a market average decline of -6%.
Barclays Capital is going to increase its IBD revenues another 4% this year, predicts Kian. By comparison, he thinks they’re going to fall by 5% across the market.
BNP Paribas has been busy building its FICC business for the past few years, and it may come to nothing. The French bank is cutting risk weighted assets and making 202 redundancies in structured finance and another 187 cuts in derivatives, FX and rates. Abouhossein thinks FICC revenues at the bank are going to fall 6%.
Whilst Goldman’s equities business is expected to outperform, Abouhossein thinks equities revenues at BNP Paribas and UBS are going to fall 14% and 13% respectively in 2011.
Credit Suisse didn’t have a great 2011. JPMorgan’s analysts think it won’t have a great 2012 either: They’re expecting IBD revenues to fall 14%. Despite an expected increase in FICC revenues at CS in 2012, you may wish to avoid Credit Suisse’s FICC business too: “We remain concerned about the Tier II FICC franchise,” JPMorgan says.