(Bloomberg) -- Wall Street’s biggest banks have spent months trying to forecast when a dealmaking comeback will arrive. As the slump threatens to enter a third year, it can’t come soon enough.

The five banks collectively posted a seventh-straight quarter of declines in investment banking fees, matching the seven quarters of heightened mergers and acquisitions activity triggered amid a pandemic era of easy money. As those heady times ended, the banks delivered less than half the revenue over the last 12 months than they generated in a record-breaking 2021.

Even a recent string of initial public offerings and talk of expanded deal pipelines risk being derailed by geopolitics and rates that keep rising. Bank of America Corp. Chief Financial Officer Alastair Borthwick said his firm is getting tired of predicting when the rebound will come. JPMorgan Chase & Co.’s CFO Jeremy Barnum said it feels like a slow grind back to normal. 

“Sitting here today, it remains hard to predict when deal activity will sustainably rebound,” Citigroup Inc. Chief Executive Officer Jane Fraser said. 

But for all the difficulty in making predictions, Wall Street executives agree a rebound is on the horizon as the Federal Reserve rate-hiking cycle could draw to an end. Some are already seeing that uptick in deals. Morgan Stanley announced 50% more mergers and acquisitions in the third quarter than the same period a year ago, it said as it reported third-quarter earnings on Wednesday.

“The minute you see the Fed indicate they’ve stopped raising rates, the M&A and underwriting calendar will explode,” CEO James Gorman said on the bank’s earnings call. “Unfortunately I’m not going to be around to to enjoy it.”

Gorman has already stated he plans to step down from his role as Morgan Stanley chief in the coming months.

As global mergers and acquisitions are headed for their worst year in a decade, banks have trimmed staff to navigate the slump. Some sought opportunities in other markets: Bank of America seized on heightened deal-making among middle-market firms to help counter the drop. 

Read More: BofA Plans to Again Double Dealmaking Team Serving Middle Market

That move helped its investment bank division beat analyst expectations, notching total fees of $1.2 billion. Middle-market clients generated “better performance for us than others, holding our position flat versus a down market,” CEO Brian Moynihan said.

‘Healthy Pipeline’

On Friday, JPMorgan reported $1.7 billion in investment-banking fees, a 3% decline on the same period a year ago, though above analyst expectations. In an internal memo to corporate- and investment-bank employees Friday, President Daniel Pinto said the firm is “encouraged by the level of capital markets activity in September, and we have a healthy pipeline of deals going into the fourth quarter.”

Citigroup’s investment banking revenue also topped estimates, jumping 34% to $844 million. Debt underwriting fees rose, with Fraser also touting “some signs of life in the equity capital markets.” Goldman Sachs Group Inc. chief David Solomon similarly struck a bullish tone, saying he’s still expecting a recovery over the next four to eight quarters driven by more active private equity firms. A meaningful uptick will come “if conditions remain conducive,” he said.

Their comments also follow a recent flurry of initial public offerings on US exchanges including Arm Holdings Plc and Instacart, which positioned September to be the biggest month for IPO fundraising since the market essentially shut in January 2022, according to data compiled by Bloomberg.

Read More: IPO Rebound in the US Fuels 2024 Optimism From Paris to Tokyo

Nasdaq said 35 firms chose to list on the exchange in the third quarter as it reported earnings for the period Wednesday. While momentum has slowed, CEO Adena Friedman remains hopeful for improvements in 2024, she said.  

“Based on our client conversations and our growing IPO pipeline, we remain cautiously optimistic on the outlook for the upcoming year,” Friedman said during a conference call. “You’re starting to see the macro environment change again. The geopolitical environment become much more unstable. And that, of course, is making investors pause again on understanding how to take that risk.”

Read More: The Great M&A Slump Is Shaking Up Giants of Investment Banking

The timing of a return to pre-pandemic levels remains hazy amid higher finance costs, volatility spurred by geopolitical tensions and threats of a global recession. Many transactions also are stuck because of wrangling over valuations or regulatory hurdles and the malaise has driven heightened levels of staff churn within investment banking units.

“We do eventually think we’ll recover” to pre-pandemic levels, “recognizing that by the time it happens, that’s many years of economic growth in the meantime,” JPMorgan’s Barnum said when his bank reported last week. 

--With assistance from Steve Dickson.

©2023 Bloomberg L.P.