Wall Street banks are piling into equities trading and doing increasingly creative things to win over clients. But as competition heats up, the low-margin business may come under further pressure.

The list of banks focused on growing equities spans both sides of the Atlantic, including Citigroup Inc, UBS Group AG and Deutsche Bank AG.

They are taking different tacks, with some focused purely on old-fashioned buying and selling of stocks, others on derivatives or exchange-traded funds, and others on prime brokerage or electronic trading. Some aim to do all things for all clients.

As newcomers try to gain ground, leading firms like Goldman Sachs Group Inc. and Morgan Stanley are fighting to maintain market share. The business already has razor-thin margins, and rivals are trying to nab clients with aggressive prices or new products, traders and analysts said.

"If everyone tries to grow equities, the economics aren't going to be that great," said Guy Moszkowski, a bank analyst with Autonomous Research. "It's also not going to be easy."

The industry has set its sights on the business because it is a safe harbor under new capital rules and because client demand is fairly strong.

However, launching and growing this kind of business requires big up-front investments that can take years to recoup. It is impossible to tell whether banks are building equities trading profitably because they only report revenue from the business, not earnings.

A veteran Wall Street executive said it would take a small player at least five years to reach No. 5 or 6 in market share. The person, who was not authorized to speak publicly, said it takes that long to recruit talent, build trading technology and attract investors with smart research and useful products.

Banks are trying to do just that.

Goldman, Morgan Stanley and UBS have created non-traditional research teams that use tools like web-scraping technology, consumer surveys, social media, climate data, droids and satellite imagery to provide unique analysis.

Such analysts might, for example, try to extract inventory data from online retailers to gauge demand for Apple Inc's latest product. Banks hope such research will convince clients to route more trading through them.

Hunt For Growth

The equities focus is part of a desperate hunt for growth across Wall Street. After five-plus years of weak results, banks are lifting every rock to find revenue underneath. First-quarter results underscored that trend.

Data from research firm Coalition shows why equities may seem attractive: as industry-wide bond trading revenue shrank 36 percent from 2010 to 2015, stock-trading revenue rose 23 percent. During the first quarter, equities trading revenue fell at big banks but fared much better than bond trading.

"It's still tough out there," said Richard Johnson, an analyst with research firm Greenwich Associates. "Fixed-income has been one of those areas that hasn't been doing well, so compared to that, other areas look better."

During last decade's bond-trading boom, some banks all but abandoned stock trading because margins were so thin. These have only shrunk since then. The average commission in U.S. markets is now 2.64 cents per share, down from 3.2 cents in 2007, according to consulting firm Accenture.

Bank executives say the only way to make the business work is to trade very large volumes, focus on high-margin products, or do all of the above. High-margin businesses like derivatives and prime brokerage tend to be riskier and require more capital but are among the few places on Wall Street where profits are rising.

Banks are also keen on structuring liquid alternative funds, which hold various securities but trade like stocks, as well as smart beta products, which allow investors to create custom indexes.

"Banks are looking at ways they can provide creative, differentiated products" that require as little capital as possible, said Greg Berman, a managing director at broker dealer Norfolk Markets who previously led institutional equity structuring at Deutsche Bank AG.

No Quick Fix

Although Wall Street has high hopes for equities trading, it won't be a quick fix for profit problems.

Citigroup, for instance, has been investing heavily in equities trading. After reporting a 19-percent revenue decline there in the first quarter, the bank's finance chief John Gerspach, said he won't be able to judge success until early next year.

Goldman and Morgan Stanley, which compete for the No. 1 spot in equities, were not immune from ups-and-downs of the business, either. They reported equities trading revenue declines of 23 percent and 9 percent, respectively.

European rivals may have to wait even longer to see investments bear fruit.

UBS Group AG has focused on equities trading since 2012, when it said it would largely pull out of bond trading. Despite leading in Asia and Europe, it has not yet caught up in the United States, according to Coalition.

Deutsche Bank is only beginning to dive more aggressively into stocks. It plans to hire around 100 people to boost the equities trading business, with an emphasis on electronic trading.