LONDON (Reuters) - Revenues at the world’s 12 biggest investment banks fell to their lowest levels since 2008 last year, a survey showed on Friday, while a return to more volatile global markets in 2018 could be a mixed blessing for their business.

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“In January banks were thinking ‘2018 will be bad for equities revenues but not as bad as 2017’, but now with the volatility of the last two weeks all bets are off,” Amrit Shahani, research director at analytics firm Coalition said.

Revenues for the 12 investment banks in the survey fell to $150 billion in 2017, a 4 percent decline on 2016, Coalition said, with falls in income from trading in equities and fixed income, currencies and commodities (FICC), two of their three main business lines, with the latter dropping 11 percent.

Investment banking advisory, the third main plank, was 2017’s bright spot with revenues up 10 percent annually thanks to a strong flow of underwriting fees from stock offerings.

The decline in revenues meant that return on equity, a key measure of profitability, fell to an average of 8.6 percent, a level at which most banks do not meet their cost of capital.

VOLATILE OUTLOOK

While the calm markets that prevailed last year are good for advisory work, because companies are more likely to issue stocks or bonds, such conditions can stifle trading revenues.

But conversely, while volatile markets can be a boon for banks as trading commissions ramp up and opportunities to profit from big price movements grow, they can disrupt advisory work.

Following the gloomy, torpid market environment in 2017 captured by the Coalition data, the world’s top investment banks are assessing the impact of a dramatic last two weeks in global markets that saw frenzied trading return.

A stock market drop triggered in the first week of February by a sharp rise in U.S. bond yields snowballed into a global selloff and wiped $4 trillion off the value of shares worldwide.

Amid the selloff there was a spike in volatility to levels not seen since August 2015, when fears of a slowdown in China rattled global stock markets.

Banks are now assessing the impact of this changed market dynamic on forecasts for 2018, particularly whether the volatility heralds an end to the equity bull run of recent years that could further depress equities trading revenues.

“While the bankers we speak to feel FICC revenues may be 10-15 percent higher than they’d expected in 2018, in equities if this is ‘bad’ volatility that signals a long period of negative activity then it could be a very tough year,” Shahani said.

Coalition tracks Bank of America Merrill Lynch BAC.N, Barclays BARC.L, BNP Paribas BNPP.PA, Citi C.N, Credit Suisse CSGN.S, Deutsche Bank DBKGn.DE, Goldman Sachs GS.N, HSBC HSBA.L, JP Morgan JPM.N, Morgan Stanley MS.N, Societe Generale SOGN.PA and UBS UBSG.S.