The chart that tells you when banking revenues (& jobs) recover
If you're waiting on the sidelines, hoping fervently for a resumption of banks' pandemic buoyancy before releasing your resume onto the jobs market, you might be waiting a while.
Mike Mayo, the Wells Fargo banking analyst known for his challenging questions on conference calls and ability to irk Jamie Dimon, has released a chart with his investment bank revenue forecasts for 2023, 2024 and 2025.
While Mayo says the "hysteria" engendered by the US regional bank failures is over, he's not predicting a return to pandemic revenue levels anytime soon.
Instead, as the charts below show, Mayo thinks 2023 will be bad (except in equity capital markets), that 2024 will be a bit better in investment banking but not in sales and trading, and that 2025 will be better everywhere. And yet, even in 2025, Mayo thinks revenues will be below the level of 2020.
Does this matter? Not necessarily, given that 2020 was a pandemic aberration born of wild fixed income trading. More promisingly, Mayo thinks 2025's revenues will be 25% above the more normal year of 2019.
Nonetheless, it's a comedown for banks that dared to think pandemic revenues might persist and that accrued staff accordingly. Bank CEOs seem to share Mayo's opinion: David Solomon at Goldman Sachs said last month that 2021 was a once in a 10-year phenomenon and that this year's low revenues in M&A are equally abnormal. In time, revenues will revert to trend, said Solomon. They won't be bad, but they won't be wildly good, either.
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