Key themes from the 1Q 2016 earnings calls

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Revenues and profitability falter in what should have been the strongest quarter of the year

In 1Q 2016, positive earnings performance was elusive. Net income was down at almost all of the banks included in this analysis. While there were a few instances of improved results — Macquarie Group reported record full-year earnings; Bank of New York Mellon, BNP Paribas and Société Générale reported an increase in quarterly earnings from 1Q 2015; and Royal Bank of Scotland turned in a narrower net loss — the prevalent trend for 1Q 2016 was disappointing performance.

Typically, the first quarter of the year is the strongest for the banking sector. However, in January and February 2016, banks around the world faced stiff headwinds from a range of macro challenges that significantly curtailed client activity levels and impacted revenue performance. Market conditions eased somewhat in March, but by then it was too late to reverse the impact on 1Q 2016 profitability.

The weak start to the year does not bode well for the rest of 2016. Anxiety about global economic growth, the trajectory of oil prices and geopolitical issues remain firmly in place, clouding the revenue outlook for the year and raising questions about whether banks should be doing more to cut costs and reposition their businesses. Notably, management at many banks did not appear to be optimistic about near-term prospects.

As observed by Deutsche Bank CFO Marcus Schenck: “1Q 2016 was extraordinarily challenging for the global capital markets and for the industry. While there has been improvement in the last month or so, there remain a number of macroeconomic and geopolitical risks to the global markets and the global economy. As such, we would expect the revenue environment to remain challenged in 2016.”

For more information about Q1 2016 earnings calls and the top 10 themes, download the full report.

Top 10 themes: a year-over-year comparison

1Q 2016
1 Earnings performance
2 Macro-environment
3 Expense trends
4 Capital
5 Credit quality trends
6 Regulatory and compliance
7 Lending trends
8 Innovation
9 Cross-border activities
10 Acquisitions and divestments
1Q 2015
1 Earnings performance
2 Macro-environment
3 Expense trends
4 Capital
5 Regulatory and compliance
6 Lending trends
7 Cross-border activities
8 Credit quality trends
9 Acquisitions and divestments
10 Innovation