Investment banking revenues down, but not out

Net revenue generated by banks from core investment banking transactions in the Asia-Pacific region is down 25% to $1.3 billion in the first quarter from $1.7 billion in the same period last year, according to preliminary data from Dealogic, which tracks financial activity.  

The drop is less pronounced than the 32% fall in global net revenue to $8.1 billion, and the 45% decline in the Americas to $3.4 billion. Indeed, as the market share held by the US has declined, the Asia-Pacific has increased its share and now accounts for 16% of global core investment banking revenue -- up from a 14% share in the first quarter 2008.

Nomura leads the Asia-Pacific core investment bank revenue ranking with a 14% share -- the Japanese bank also ranked first in the corresponding period in 2008 with a 9% share. Banking revenues in Japan were up 5% to $542 million, accounting for a 42% share of the market.

The dull spot is China, with a mere $80 million in investment banking revenues year-to-date, down 83% from this time last year. The country's share in Asia-Pacific is a tiny 6.3%, not much more than Singapore's 6%. Hong Kong isn't looking much better, with just $13 million in investment banking revenue in the first quarter, down 68% from the same period last year and representing just 1% of the regional pie.

In terms of products, it comes as no surprise that equity capital markets (ECM) are suffering, with revenues down 75% in Asia ex-Japan, underscoring how much issuance has slowed particularly in China, Hong Kong and India. ECM is down just 39% if you include Australia and Japan and look at Asia-Pacific as a whole.

Nor should it raise too many eyebrows that the good news is to be found in the debt capital markets (DCM), particularly in Australia. If you include Australia and Japan, DCM revenues are up 67% in the Asia-Pacific, and that number stays high -- at 65% -- if you exclude Japan.

Challenging Nomura on the overall IB front is UBS, which leads the Asia-Pacific (ex-Japan) and Asia (ex-Japan) revenue rankings.