First, they blamed Brexit and its uncertainty, then they pointed a finger at the Sino-US trade spat and the slowdown in international trade for lousy earnings at their firms. The new go-to excuse for disappointing quarterly earnings are negative yields. Today UBS announced a 16 per cent drop in Q3 profits, including a 59 per cent slump in its investment banking division. ‘’Low and persistent negative interest rates and expectations of further monetary easing will adversely affect net interest income’’ – not forgetting they had earlier announced interest will be charged on cash savings over 500,000. Over at JP Morgan Jamie Dimon admitted that negative rates have ‘’adverse consequences which we do not fully understand’’.
Also on banking, City AM reports on a study carried out by McKinsey on 1,000 banks globally. They found that 35 per cent of them earned an average 1.6 per cent return on tangible equity and should therefore be classified as ‘challenged banks’. ‘’Given where many in the banking industry are today, a serious downturn would be catastrophic for many’’; they must restructure, slash costs and merge.
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