Morning Coffee: Deutsche Bank & HSBC confirm it's a fine time to be a trader. Affront to banking egos
We've been here before. When COVID struck in early 2020, deals shrivelled while traders basked in volatility. Something similar has happened under Trump II.
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Both Deutsche Bank and HSBC confirmed the pattern in their first quarter results, released this morning. At Deutsche, fixed income sales and trading revenues were up 91% year-on-year in the first quarter to €2.9n (including financing), a level that Bloomberg says had not been achieved for 13 years, at least. Deutsche Bank CFO James Von Moltke said rates and FX trading revenues were particularly strong.
HSBC has stopped breaking out fixed income and equities sales and trading revenues, but its aggregate 'debt and equity markets' division did very well too, with a 46% increase in revenues year-on-year. HSBC said FX traders drove the gains.
In investment banking the first quarter wasn't bad. HSBC's beleaguered bankers held revenues steady; Deutsche Bank's swollen ranks of M&A bankers increased revenues 22% year-on-year. This was before the shock of the Liberation Day tariffs, though.
Financial News observes that the investment bank's performance across the board in Q1 helped generate Deutsche Bank's highest profits in a quarter for 14 years. People will be paid for this performance: Deutsche says it accrued an extra €132m in compensation costs in the quarter, partly reflecting 'higher performance-related cash accrual.'
It's not all good news, though. Q1 doesn't cover the chaos of April, when Von Moltke told Bloomberg that Deutsche's deals dependent businesses "slowed dramatically." Provisions for bad loans are up at HSBC, where bankers are being cut, and $200m of severance costs were accrued to pay unwanted individuals in the first quarter. "The macroeconomic environment is facing heightened uncertainty," says HSBC sagaciously. Second quarter results will not be like the first.
Separately, Financial News notes that co-heads are back and that senior banking egos cannot always tolerate it. Citi, for example, promoted Ashu Khullar to co-head its coverage of private equity firms alongside Anthony Diamandakis. Then Diamandakis left.
Barclays meanwhile hired John Koltz from RBC to co‑head its equity capital markets business in March. And then Tom Swerling, who'd been running the business alone since 2023 announced he was leaving for Deutsche Bank....
Meanwhile...
ClearStreet hired Matthew Cousens, who once worked for Citi. (The Trade)
Private equity firms are very interested in the European defence industry. (Bloomberg)
Daiwa Securities is hiring in ECM and M&A as its revenues boomed because clients began unwinding cross shareholdings in Japanese companies. (Bloomberg)
Dymon Capital is expanding relative value equity trading in Asia under Shao Ying. (Bloomberg)
Young people now want to work for Centerview, Evercore and Perella Weinberg. (Business Insider)
Fintechs can't crowdfund their IPOs any more. This could be good news for fintech bankers. (Bloomberg)
The new misery of working in tech. At Amazon Web Services, one product manager says he hasn’t been allowed to backfill roles even though his group within the massive cloud-computing unit has taken on many more customers. Last year, he ended up writing code, something he hadn’t done in 10 years, because the team that would normally do it wasn’t available. (WSJ)
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