Record fees from debt issuance and a big jump in capital raisings this year have offset plunging deal revenues, annual figures show.
Investment banks earned $18bn from debt capital markets in 2009 as companies tapped bond markets heavily to shore up balance sheets, according to Dealogic. A 33% rise in revenues from debt issuance coincided with a 64% jump in earnings from equity raisings, which earned banks $23.3bn in fees.
Bankers said that optimism among chief executives was growing, encouraged by more benign financial markets, and that next year could see a recovery in mergers and acquisitions activity and initial public offerings.
The jump in debt and equity issuance compensated for the decline in income from dealmaking, which sank to its lowest level since 2003. There were $2340bn of deals in 2009, a 26% fall on the $3170bn recorded last year, said Dealogic. Private equity groups in particular, had a tough year, with buy-out volumes falling 62%.
Henrik Aslaksen, global cohead of M&A at Deutsche Bank, said that would change next year.
Although the total volume of deals involving companies in emerging markets fell 23%, bankers expect these companies to play an important part in the recovery of M&A activity as they expand globally.
The low volume of deals meant bankers pulled in only $12.5bn in advisory fees, a 43% decline on the $21.generated in 2008.