Investment Bank Forecasts Fall in European Banking Earnings

Thu, 20 Mar 2008

Keefe, Bruyette and Woods investment bank has forecast a 1 per cent drop in earnings in the European investment bank sector in 2008. The bank’s forecast is 4 per cent less than general market consensus, and 12 per cent below its initial 2008 forecast.

Although the bank predicted a 4 per cent increase in loan volumes, the forecast also contained expectations of a 13 per cent fall in fixed income fees, which will cancel out any improvement in loan margins.

The forecast also expects the first quarter of 2008 to see £10 billion of further writedowns on mortgages, leveraged loans and sub-prime related security holdings, taking the total amount written off in these sectors by European banks to £35 million.
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