24th June 2024

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Business Industry and Financial

Global investment banking fees hit five-year low in 2023

A subdued mergers and acquisitions (M&A) market has impacted investment banking fees, leading to a dip in global revenues to a five-year low in 2023, according to data from LSEG.

The firm reported that global investment banking fees fell to $106bn in 2023, marking a 7% decrease compared to the previous year and representing the slowest annual period since 2018.

The slowdown in M&A volumes and valuations overshadowed positive trends in both equity and debt underwriting fees. Equity capital markets fees reached $14.7bn for the full year, marking a 2% increase from 2022 levels, while debt capital markets fees displayed a notable 11% increase. Despite these increases, M&A advisory fees experienced a significant 25% year-on-year decline, amounting to $29.6bn. Additionally, fees from syndicated lending activities also faced a downturn, seeing a 10% decrease and falling to $25.8bn.

In geographical terms, the Americas region claimed the largest share, comprising 47% of the global fees, or $49.6bn. However, it also experienced the most significant decline, with an 11% drop. The $24.6bn earned in Europe, the Middle East and Africa was down by 6%. Asia-Pacific also experienced a 6% decline in fees.  

Amid the global downturn there were, however, some notable bright spots. Equity market activity in Japan and India saw significant growth, contributing to fee increases of 24% and 28%, respectively. 

While India’s M&A activity fell to a three-year low, equity underwriting saw a notable 68% rise, contributing $343.5m in fees to reach a total of $1.3bn — the highest for the country since LSEG’s records began in 2020. 

India’s equity market is currently experiencing a sustained surge in activity. Industry commentators attribute this to a host of factors, including positive investor sentiment fuelled by optimistic growth forecasts and a desire from companies to secure funding in anticipation of the country’s upcoming general election in May. According to projections from the IMF, India’s economy is expected to grow by 6.3% in 2024, surpassing the global average of 3%.

Meanwhile, in Japan stocks reached a 33-year high, aided by measures taken by the bourse to enhance governance, supported by a broader economy displaying indications of overcoming decades of deflation. According to separate figures published by Bloomberg, the funds raised from initial share sales and additional offerings in Japan reached almost $31bn in 2023, exceeding more than three times the total for all of 2022.

Within the global investment banking fees ranking, JPMorgan maintained its top position, accounting for $7.2bn in earned fees and holding a 6.8% share of the total investment banking fees wallet. Goldman Sachs remained in second place with an estimated 5.5% share, despite a 15% fall in earned fees compared with the previous year. Bank of America secured third place with a 4.8% share.