Trading and forex income could decline by 6%.
Trading gains in the past few years have been significant, which tend to improve as bond prices increase. Maybank Kim Eng estimates treasury gains will account for only 4% of gross revenue next year, down from 17% in 2013.
"Yield on 10-year bonds has increased 125bps. Likewise, 5-year and 7-year bonds have jumped 90bps and 25bps, respectively. Thus, trading gains are likely to be weaker next year as bond prices fall. In all, our forecasts assume an average of 6% decline in trading and forex income next year. Fortunately, the impact on bottom lines should be partly cushioned by improving fee income," said Maybank Kim Eng.
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