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Goldman Sachs (NYSE: GS) again topped the revenue chart in Merger & Acquisition (M&A )advisory space with JPMorgan being the distant second in 2019. However, the same is not true about the total Investment Banking market which is predominately ruled by 5 major U.S players with JPMorgan leading the pack, closely followed by Goldman Sachs, Bank of America, Morgan Stanley and Citigroup.They collectively generated over $31.1 billion in investment banking revenues over 2019, up from $26.9 billion in 2016. Further, we expect the figure to grow by 2.6% in 2020 to $32 billion.Investment Banking can be divided into three sub-segments - M&A Advisory, Debt Origination, and Equity Underwriting.Although Goldman Sachs is the market leader in M&A advisory space, the same is not true with the other subsegments.JPMorgan is the market leader in the debt underwriting space and is expected to retain its position in 2020. Further, Morgan Stanley bagged the first slot in Equity Underwriting business in 2019 and is expected to retain it in the subsequent year.In this dashboard, we analyze the Investment Banking business of Goldman Sachs with respect to its primary competitors.
The top 5 U.S investment banks generated over $31.1 billion in Investment Banking revenues over 2019, posting a y-o-y decline of about 1.2%.
This decline was mainly due to challenging economic conditions in the first three quarters of 2019, characterized by the U.S-China trade war, negative bond yield, Brexit, etc.
Moving Forward, we expect the total figure to touch $32 billion in 2020 - up by 2.6% y-o-y, although negative economic scenario could hamper its growth.
Total IB Revenue (GS + MS + JPM + c + BAC)
YOY change in IB revenues
Note: We have considered JPMorgan, Goldman Sachs, Morgan Stanley, Citigroup and Bank of America for this analysis.
Investment Banking can be divided into three subsegments
#1. Merger & Acquisition advisory
#2. Equity Underwriting
#3. Debt Origination
Goldman Sachs is the market leader in the global M&A advisory industry, with M&A advisory revenues of $3.2 billion in 2019, followed by JPMorgan ($2.4 billion), Morgan Stanley ($2.1 billion), Bank of America ($1.5 billion) and Citigroup ($1.3 billion).This could be attributed to Goldman’s higher fees from its dominance in the M&A advisory industry. Notably, Goldman’s M&A advisory fees have been roughly 14% higher than its closest competitor (JPMorgan) in 2019.Further, we expect the bank to maintain its dominance in the coming years, enabling it to touch $3.5 billion by 2020 – an increase of 9% y-o-y. Its nearest competitor JPMorgan is expected to report around $2.4 billion in M&A advisory revenues for the year, which is 43% less than the Goldman’s figure.
It must be remembered here that debt origination revenues fell in the first three quarters of 2019 due to the combined effect of the U.S.-China trade war, Brexit and the negative bond market yields. However, better than expected trading performance in the last quarter compensated for the loss.Overall, the consolidated segment revenues for the top 5 U.S investment banks were $13.65 in 2019, which was 2% more than the previous year. Further, we expect it to improve by 1.7%, enabling it to touch $13.88 billion in 2020.Goldman Sachs was at the #4 spot in the debt origination space in 2019 and is expected to maintain its position in the subsequent year with $2.3 billion in segment revenues.JPMorgan would continue to lead the pack with $3.6 billion in expected debt origination revenues for 2020, followed by Citigroup ($3.1 billion) and Bank of America ($3 billion) for second and third spots respectively.
See our complete set of analysis for Morgan StanleyJPMorganBank of AmericaCitigroupGoldman Sachs