Goldman Sachs maintains structured products sales volumes in the second quarter of 2016, as JP Morgan take the brunt of a reduction in sales over the period. While the number of structured products issued over the quarter was around 10% lower than in the second quarter last year, sales volumes dropped by a third. SRP reviews the data, and quarterly financial results of the top six US structured products manufacturers.
With a share of 19% of the US structured product market, JP Morgan topped the US provider table in the second quarter of 2016, although both its issuance and sales were far below its performance in the same period last year, according to SRP data. The bank issued 581 structured products worth $1.9bn between April 1 and June 30, 2016, against 675 products worth $2.8bn in the same quarter last year.
The bank reported net revenues for its corporate and investment bank of $9.2bn in the second quarter of 2016 (second quarter 2015: $8.7bn). Markets and investor services revenue was $6.5bn, up 13%, driven by higher markets revenue. Fixed-income markets revenue, which was up by 35%, reflected a strong performance in rates and currencies and emerging markets on higher client flows as well as better credit and securitised products driven by better market conditions, according to the bank. Equity markets revenue was higher by 2%; while securities services revenue was $907m, down by 9%.
Goldman Sachs issued 256 structured products in the US in the second quarter of 2016, of which 166 were linked to equities, 57 to a hybrid basket and 33 to the interest rate, collecting combined sales of $1.3bn.
The bank reported net revenues in investment banking of $1.8bn for the quarter, 11% lower than in the same quarter last year and 22% higher than in the first quarter of this year. Net revenues from institutional client services, at $3.7bn, were 2% higher on the year and 7% higher than the first quarter, according to the bank.
Net revenues in fixed income, currency and commodities client execution were $1.93bn for the second quarter of this year, 20% higher than the same quarter last year, due to significantly higher net revenues in currencies and credit products, as well as higher net revenues in interest rate products and commodities.
During the quarter, the operating environment for equities was affected by lower levels of client activity, lower market volumes and a decline in volatility from the first quarter of 2016, stated the bank. 'Despite the uncertainty created by Brexit, we achieved solid results by continuing to serve our clients across our diversified franchise and by managing our business efficiently,' said Lloyd Blankfein (pictured), chairman and chief executive officer of Goldman, in a statement.
Bank of America-Merrill Lynch's (Baml) structured issuance was limited to just 33 products in the second quarter, although its sales volume ($872m) was among the highest in the US. The bank's one-year Accelerated Return Notes - S&P 500 (06053Y884), with sales of $182m, was the best-selling product in the US in the second quarter. The note offers 300% participation in the positive performance of the S&P 500, capped at an overall maximum return of 111.88%.
Baml recorded revenues for the second quarter of this year of $20.6bn, net of interest expenses. Sales and trading revenues were up 14% on the year in global markets, and 27% in fixed income, although income from equities was down 8%, according to the bank.
Morgan Stanley issued 108 structured products with a combined sales volume of $545m during the second quarter of this year, the majority of which (69) were linked to equity indices, with the Eurostoxx 50 (24) and S&P 500 the most frequently used.
The bank stated that its second quarter results reflected a solid performance in an 'improved but still fragile environment', and posted net revenues of $8.9bn and earnings per diluted share of $0.75. Institutional securities net revenues were $4.6bn, reflecting continued strength in equity sales and trading and a solid performance in fixed-income sales and trading, which were partly offset by lower underwriting results, according to the bank.
The bank's net revenues from wealth management for the quarter were $3.8bn; pre-tax margin was 22.5%; and fee-based asset flows for the quarter were $12bn. Investment management reported net revenues of $583m with assets under management or supervision at $406bn.
Wells Fargo, which issued 55 structured products with sales of $371bn between April and June 2016, reported revenues of $22.2bn, up 4% from the previous year. Net income stood at $5.6bn, compared with $5.7bn in the second quarter of 2015, while total assets under management, at $484bn, were down 1% from last year, primarily due to equity fund outflows although these were partially offset by favourable fixed income net inflows and higher market valuations, according to the bank.
Citi launched 97 structured products worth $347m in second quarter 2016. For the same period, the bank reported net income of $4bn. The total loss absorbing capacity of the bank's total long-term debt was reported at $111bn at the end of the second quarter, which included $84bn of senior benchmark debt and $27bn subordinated.
Click the link to view the 2Q 2016 results for Bank of America-Merrill Lynch, Citi, Goldman Sachs, JP Morgan, Morgan Stanley and Wells Fargo.
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