Goldman Sachs Group Inc. and Morgan Stanley will likely see a slowdown in nearly all business lines in 2009, while write-downs will persist through the first half of the year, an analyst wrote in a research note Tuesday.

JPMorgan Chase & Co. analyst Kenneth Worthington said the pair of banks will face a challenging 2009 as the financial services sector will continue to be plagued by the ongoing credit crisis and the economy will remain weak.

The banks will likely see a drop in origination volume of between 20 percent and 25 percent in 2009, while mergers and acquisition volume will fall by about 15 percent, Worthington wrote in the note.

Worthington said the pair of banks will also face write-downs through the first half of the year, especially in leveraged loans and commercial real estate. Leverage loan values will probably continue to fall as corporate defaults rise, Worthington said. Commercial real estate values are also likely to fall because of continued weakness in the mortgage sector, he added.

Wealth management will be a bright spot for the pair, but retail activity is likely to slow down during the year amid the challenging economic environment, Worthington said.

The wealth management businesses will provide Goldman and Morgan Stanley an opportunity to grow their deposit bases after recently becoming bank holding firms. The change in structure allows the banks to build deposit bases and tap a wide array federal lending programs. The programs have been put into place to help financial firms struggling with funding options amid the ongoing credit crisis.

Worthington said Goldman and Morgan Stanley will probably focus deposit growth on wealth management customers and brokered certificates of deposit, instead of purchasing traditional retail banks. Any acquisitions the pair would make would probably focus on building high net worth or commercial relationships, he added.

Worthington rates Goldman Sachs "Overweight" with a $95 share price target. He set a $16 price target on Morgan Stanley. Worthington rates Morgan Stanley "Neutral."

Worthington lowered his 2009 earnings estimate on Goldman Sachs to $6.25 per share from $7 per share. He introduced a 2010 earnings estimate of $12.43 per share.

Worthington increased his 2009 earnings estimate for Morgan Stanley to $2.35 per share from $2.15 per share. He set an initial earnings estimate of $3.70 per share for 2010.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.