Led by four large banks (with about 90% of total derivatives), trading revenue balloons by 141% in Q1’19

Trading revenue ballooned by 141% — to $10 billion – in the first quarter at commercial banks and thrifts, the regulator of national banks reported Tuesday, with only four banks holding nearly 90% of total derivatives.

The Office of the Comptroller of the Currency (OCC) said in its Quarterly Report on Bank Trading and Derivatives Activities that revenue growth since year-end 2018 in derivates was $5.9 billion. The regulator also reported:

  • Four large banks held nearly 90% (88.3%) of the total notional amount of derivatives in the banking industry at the end of the first quarter of 2019; the rest is held by 1,314 other insured U.S. commercial banks and savings associations.
  • Credit exposure from derivatives decreased in the first quarter of 2019 compared with the fourth quarter of 2018. Net current credit exposure (NCCE) decreased $5.0 billion, or 1.6%, to $335 billion.
  • Derivative contracts remained concentrated in interest rate products, which represented 74.1% of total derivative notional amounts.
  • The percentage of centrally cleared derivatives transactions increased quarter-over-quarter to 42.4% in the first quarter 2019.

The OCC also reported that trading revenue in the first quarter 2019 increased by 30.6% compared with the $7.7 billion reported in the first quarter 2018.

OCC’s Quarterly Report on Bank Trading and Derivatives Activities: First Quarter 2019

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