2017 has been much more calm, which is bad for these businesses.
Bank of America (BAC) saw third quarter trading revenue down 15%, led by a 22% drop in its fixed income, currencies and commodities trading division.
CEO Brian Moynihan pointed to difficult year-ago comparisons.
“Revenue across our four lines of business grew 4%, even with a challenging comparable quarter for trading,” he said in the company’s release.
In Citigroup’s (C) third quarter earnings report, the bank said that fixed income markets revenue decreased 16%, “given low volatility in the current quarter and comparison to higher Brexit-related activity a year ago.”
Meanwhile JPMorgan (JPM) also saw tepid trading activity in its third quarter. Revenues for its fixed-income unit were down 27% from a year earlier.
At a Barclays-hosted conference in September, bank leaders said they expected revenue from trading to drop 15-20%, blaming low volatility and low volume, but also specifically called out the wane in Brexit-related drama in the markets.
Citi CFO John Gerspach pointed to this in his September remarks.
“When you look at the third quarter, I think the first thing that you need to comment on, and it’s been commented on a lot, is the fact that volatility has remained somewhat subdued throughout this quarter,” he said. “Especially when you compare it to the third quarter of last year where we had a lot of activity in the markets in the third quarter of last year, both on the heels of Brexit and then in advance of the US elections. We’re not seeing that now.”
Bankof America Merrill CFO Paul Donofrio echoed those sentiments.
“If you look at last year third quarter, that was probably the best third quarter we’ve ever had or seen in a long time for sure with Brexit and lead up to the election,” he said. “This quarter was—it’s a tough comparison to that quarter.”
KBW analysts expect Goldman Sachs (GS) to see the largest drop in trading revenue, projecting a 20% decline driven by a 40% plunge in fixed income, currencies and commodities trading.