Bank trading revenue up 2.7% in 3Q, OCC reports

Trading revenue of U.S. commercial banks and federal savings associations rose $0.2 billion, or 2.7%, from the second quarter to a total of $7.1 billion, the Office of the Comptroller of the Currency (OCC) said in a report Wednesday.

The third-quarter total was also up 1.7% from the same time last year, when banks’ trading revenue totaled $6.9 billion, according to the report, Quarterly Report on Bank Trading and Derivatives Activities.

According to the report:

  • Four large banks held 89.8% of the total banking industry notional amount of derivatives. (A total of 1,344 insured U.S. commercial banks and savings associations held derivatives at the end of the third quarter 2018.)
  • Derivative contracts remained concentrated in interest rate products, which represented 75.7% of total derivative notional amounts.
  • The percentage of centrally cleared derivatives transactions increased to 40.7% in the third quarter 2018.
  • Credit exposure from derivatives decreased, year over year. Net current credit exposure (NCCE) decreased $5 billion, or 1.4%, to $356.6 billion.
  • Trading risk, as measured by daily value-at-risk (VaR), decreased in the third quarter. Total VaR across the top five dealer banking companies decreased $21 million, or 7.9%, to $246 million.
  • Derivative notional amounts decreased in the third quarter of 2018 by $206 billion, or 0.1%, to $207 trillion.
  • Derivative contracts remained concentrated in interest rate products, which represented 75.7% of total derivative notional amounts.

Consolidated holding company trading revenue of $13.7 billion in the third quarter of 2018 was $1.2 billion (7.9%) lower than in the previous quarter; the decline was due to decreases in equity and credit trading revenue products. Year-over-year holding company trading revenue was also down $1.2 billion (7.9%) in the third quarter, the report shows.

OCC Reports Third Quarter 2018 Bank Trading Revenue

Quarterly Report on Bank Trading and Derivatives Activities (3Q)

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