The bumper profits of investment banks are set to for a swift reversal as competition between the largest firms begins to erode the large margins that have boosted earnings since the start of the year, analysts claimed today.

Sales and trading divisions, in particular fixed income, currencies and commodities businesses, have made record profits for several banks this year. However, analysts Daniel Davies and Rupak Ghose at Credit Suisse wrote in a report today that the pricing power of banks could be "competed away very quickly".