Throughout the remainder of this year, equity and debt markets are expected to exhibit greater volatility, finds an IIAC release. As a result, there’s a chance for further declines in equity prices.
“Against this backdrop, we expect capital markets financing trends to stay robust, particularly in the non-resource sectors,” notes the release.
It adds that integrated firms and institutional boutiques with diversified investment banking operations will post profits, albeit at lower levels than 2013 to 2014 for institutional firms. The fixed-income trading and new issue business will stay robust.
Here are some additional findings.
- Operating revenue and profit at the integrated firms are expected to increase 6% and 3%, respectively, in 2015.
- Operating revenue at institutional boutique firms is projected to drop 11%, with profits down nearly 20%.
- Operating revenue at retail boutique firms is forecast to be the highest in nearly a decade, though profit is likely to drop 23% this year. This reflects continued increases in operating costs (up roughly 6% year-over-year) related to the increased compliance and technology burden at retail firms.
- The increased reliance of the wealth management business on fee-based revenue will bring some stability and revenue support to retail operations. The self-clearing retail firms will see a substantial increase in operating costs this year and next, severely denting earnings performance.
- The outlook for the investment industry over the next year will not be robust, but positive business factors leave room for optimism.
- The industry has borne a steadily increasing regulatory burden throughout, leaving the hope that the pace of rulemaking will slow. A well-diversified industry, with vigorous full-service dealers and specialized retail and institutional firms, remains the order of the day.