With three and a half months left of 2014, which banking jobs should you be positioning yourself for next year? JPMorgan's banking analysts have just issued a new research note with some hints and tips.
Contrary to recent bullish pronouncements about a possible fixed income currencies and commodities (FICC) rebound in mid-2015 (by JPMorgan's CFO, strangely enough), JPMorgan's banking analysts think next year will bring more of the same for (FICC) traders. Witness the chart below: they predict that 2015 FICC revenues will fall a further 3%.
JPMorgan analysts like UBS. The Swiss bank is their 'top stock pick' among global investment banks. This is thanks to its asset-gathering private bank and to its potential to cut the amount of capital it requires even further.
Even better, if you're employed by UBS's investment bank, JPMorgan's analysts think you'll receive a high proportion of revenues in compensation. As the chart below shows (click to enlarge and render legible), UBS is expected to pay 51% of its revenues in compensation this year, 47% next year, and 46% in 2016. This compares to just 37% throughout the period at Goldman Sachs.
While JPMorgan's analysts love UBS, they're not so hot on Credit Suisse.
They don't think the strategy for Credit Suisse's investment bank is sustainable in the long term. In particular, they think that Credit Suisse will need to do some serious restructuring of its fixed income business, which is still too capital-hungry. Specifically, they think that Credit Suisse's fixed income revenues will fall by 8% between 2015 and 2016 (while UBS's FICC revenues will increase by 9%).
Finally, JPMorgan's analysts are pretty impressed by the fixed income restructuring that's going on at Morgan Stanley.
However, before taking a fixed income job at the U.S. investment bank, it's worth noting that only some areas of Morgan Stanley's business look good long term. Analysts at CreditSights, the fixed income research firm, noted today that when Morgan Stanley CFO Ruth Porat spoke at the Barclays Financial Services Conference this week, she said that the return on equity in the bank's credit and structured products groups is now 15%. Porat said that this compares to just 5% in the commodities and macro products businesses. If you work in FICC at Morgan Stanley, it's easy to see which businesses to seek out and which to avoid.