J.P. Morgan's new guide to the best and worst jobs in banking in 2017

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As happens in most years, 2017 isn't going to plan. This was supposed to be a strong year for fixed income salespeople and traders. Instead, both broad macro and credit businesses now look under pressure. This year, it was hoped that M&A might pick up, driven by both by a 'Trump Bump' and preemptive Brexit positioning. Instead, Deutsche Bank's "pulse" indicates that M&A revenues are floundering. Only equities revenues are complying to expectations: Morgan Stanley and Oliver Wyman predicted in March that cash equities and equity derivatives revenues would be up this year, and so they seem to be.

Now J.P. Morgan's team of European banking analysts have thrown their own set of predictions into the mix. This is what J.P.M's analysts say to expect when banks release their second quarter results, along with their forecasts for 2017 as a whole.

1. Broadly, the best jobs this year are in investment banking divisions (IBD). The worst are in fixed income, currencies and commodities (FICC) trading

As the chart below shows, J.P. Morgan' analysts are predicting an impressive 9% increase in revenues across investment banking divisions (M&A advisory revenues + equity capital markets revenues + debt capital markets revenues) this year compared to last. By comparison. fixed income and equities sales and trading revenues are expected to fall.

2. Within fixed income trading, credit desks are looking better than macro desks 

Research firm Coalition estimated that credit trading revenues at the biggest banks were up a huge 65% year-on-year in the first quarter. J.P. Morgan thinks credit revenues have also held up better other areas in Q2. Although credit revenues are likely to have fallen vs. the first quarter, the analysts suggest that narrowing spreads are likely to have increased the value of banks' credit inventory positions, which will be good for revenues. By comparison, macro businesses are thought to have performed poorly: rates and FX revenues are likely to be down more significantly on the first three months of the year.

3. European cash equities desks are looking good, U.S. cash equities desks, less so. Equity derivatives seem very fine

As Deutsche Bank's pulse indicated, equities desks are a good place to be right now, particularly in Europe. J.P. Morgan points out that European cash equities trading volumes were up 14% in the second quarter compared to the first. However, they were down 1% in the U.S..

Equity derivatives revenues, meanwhile, are thought to be holding up as investors adjust for expected rates changes and the tapering out of quantitative easing.

4. Equity capital markets is the place to be in IBD

Although investment banking division (IBD) revenues are looking good, not all areas of IBD are equally vital.

J.P.M says equity capital markets (ECM) are driving the strength in IBD. By comparison, debt capital markets (DCM) businesses are looking dismal and M&A is weak.

5. In fixed income trading, you probably want to work for Morgan Stanley this year

Morgan Stanley's FICC business was the winner in the first quarter. J.P.M. thinks it will also be the winner this year as a whole. By comparison, Barclays, Goldman and UBS are expected to flounder when their revenues are compared to 2016.

6. In IBD, you probably also want to work for Morgan Stanley this year 

Morgan Stanley and Deutsche are expected to be the winners in IBD in 2017, with Morgan Stanley's revenues increasing by a fifth compared to last year.

J.P. Morgan doesn't explain its optimism regarding DB. It may have something to do with the fact that Deutsche's M&A revenues have floundered in recent years: the only way is up.

7. In equities sales and trading, you probably want to work for BNP Paribas this year

Lastly, J.P.M's analysts are feeling optimistic about BNP Paribas's equities business this year. By comparison, equities sales and trading at both Goldman Sachs and Barclays are expected to shrivel. At Barclays, this is despite a big shakeup in the U.S. equities trading business, as new CEO Tim Throsby tries to put things back on track.

Contact: sbutcher@efinancialcareers.com

Photo credit: Trophies by Brad.K is licensed under CC BY 2.0.

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