www.jpmorganmarkets.comEurope Equity Research19 May 2016Global Investment Bank TrackerQuiet 2Q trading floors - leading to further EPS cuts with FICC to outperform EquitiesGlobal IBsKian Abouhossein AC(44-20) 7134-4575kian.abouhossein@jpmorgan.comBloombergJPMA ABOUHOSSEIN <GO>Amit Ranjan(44-20) 7134-4576amit.x.ranjan@jpmorgan.comVivek Gautam, CFA(44-20) 7742 3244vivek.gautam@jpmorgan.comDelphine Lee(44-20) 7134-3971delphine.x.lee@jpmorgan.comRaul Sinha(44-20) 7742-2190raul.sinha@jpmorgan.comJ.P. Morgan Securities plcSee page 57 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.Following weak IB revenue performance by Global IBs in Jan & Feb, we saw signs of improvement in March which have only continued in credit(within markets) and ECMin 2Q, with the remainingbusinesses showing normal seasonal slowdown. We expectFICC(- 5% q/q) to outperform Equities (- 9% q/q) in Q2. In FICC, a flattish credit environment in 2Q will only partly offset slowdown in Macro revenues whereas in Equities, we expect cash to underperform derivatives (we expect Asia to materially underperform despite weak Q1). We forecast IBD revenues to be +1% q/q due to +29% q/q increase in ECM from a low 1Q base (April 39% of 1Q) & +4% q/q in DCM driven by HY +80% q/q (Dealogic pro- rated data), offsetby - 16% q/q decline in M&A revenues after a strong 1Q. Overall, we forecasttotal 2Q16E IB revenues to be -5% q/q and cut our avg. EPS estimates by 2-4% in 2016E-18E. Our pecking order within Global IBs: DB, GS, MS, BARC, UBS, SG, CSGand BNPP.We estimate 2Q16E FICC revenues to be -5% q/q, which is better than normal seasonality given easier comps due to weak Jan and Feb, particularly in credit, which we expect is running flat q/q with HY+ABS+MBS issuance fees +70% q/q reflecting the better environment. Also, flat cash credit trading volumes are accompanied by healthy volatility in the quarter. Macro is showing a normal seasonal slowdown. FX revenues are down q/q as seasonal decline in volumes (c-15% q/q) is partly offset by higher volatility (+6% q/q). Rates business did well in April driven by strong issuance volumes, however, issuances have slowed down in May which along with lower volatility (-14% q/q) are leading to q/q decline in our view. We estimate 2Q16E Equity revenues to be -9% q/q,with equity derivatives outperforming cash. Cash volumes are -10- 15% q/q (pre-summer slowdown) and markets flat in Q2 so far. In derivatives, lower revenues are driven by ongoing weakness in Asia (flow and structuring weak) and seasonal decline in US, partly offset by better performance in Europe. We conclude, in Q2, in FICC, global IBs (GS, MS, DB, CSG) should catch up with Money Centered banks which outperformed in Q1, as we expect Credit to outperform Macro. In equities, we expect Asia equity geared IBs UBS, SG & CSGto underperform. WM geared players UBS &CSG would also be impacted by lower transaction volumes & Asia gearing. DBis our top global IB pick(5.0x P/E, 0.4x NAV, 8.1%RoNAV in ‘18E)where cost & hence EPS could surprisevs. consensus with JPMe PBT 10% abovein ‘16E. GS is our top US IB pick.Table 2: Summary Overview, local currency (revenues in millions)PriceEPS 16EEPS 17EFICC Rev 2Q 16EEquities Rev.2Q 16EIB div. Rev 2Q 16EB3CET1*2016EB3CET1*2017ETBV/Share**2016ETBV/Share**2017ERoNAV**2016ERoNAV**2017ECS13.70.300.9997575378911.9%13.3%18.6420.461.6%5.1%UBS 14.41.111.2642580050413.5%13.4%11.7112.069.1%10.6%DB14.81.822.431,84461953611.3%11.6%35.7335.705.0%6.8%GS158.411.6014.251,6651,5841,41512.1%12.5%162.68170.677.2%8.5%MS27.02.002.508751,90091814.7%14.7%31.3732.066.4%7.8%BNP 45.05.055.16900380-11.2%11.9%56.7460.639.2%8.8%Socgen34.03.684.12600630-11.4%11.7%52.6654.967.1%7.7%Barclays1.78.119.870448246411.9%12.8%2.842.953.0%7.0%Source: J.P. Morgan estimates, Bloomberg. Priced on 18th May EOD (GS & MS 18t h May intraday); * B3CET1 is assuming no phase in of deductions. **Ex own debtTable 1: Global IBs: clean average IB revenues progression 2Q16E/1Q162Q16E/2Q1516E/ 1517E/ 16E18E/ 17EFICC-5%-12%-13%6%2%Equity-9%-28%-21%7%3%IBD1%-32%-21%7%3%Total-5%-24%-19%7%3%Source: J.P. Morgan estimates, Company data.Please see our notesEuropean Banks Outlook and Best Ideaspublished on 25 April 2016European Banks Funding concerns overdone, but EPS at risk: risk-reward remains unattractivepublished on 16th Feb 2016European Banks Top picks and Investment themes for 2016published on 6th Jan 2016 2Europe Equity Research19 May 2016Kian Abouhossein(44-20) 7134-4575kian.abouhossein@jpmorgan.comEquity Ratings and Price TargetsMkt CapPriceRatingPriceTargetCompanyTicker($ bn)CCYPriceCurPrevCurP