Banks’ trading revenue down 8.5% in fourth quarter, at $6.3 billion

Reported trading revenue of U.S. commercial banks and savings associations totaled $6.3 billion in the fourth quarter of 2020, down $588 million, or 8.5%, from the previous quarter, the Office of the Comptroller of the Currency (OCC) said Tuesday.

The OCC Quarterly Report on Bank Trading and Derivatives Activities showed that year over year, fourth-quarter trading revenue declined $778 million, or 11%. Fourth-quarter 2019 trading revenue came in at $7.1 billion, the report said.

In other data, the OCC reported that:

  • Credit exposure from derivatives increased in the fourth quarter of 2020 compared with the third quarter of 2020. Net current credit exposure (NCCE) increased $17 billion, or 3.6%, to $507 billion.
  • While four large banks held 88.4% of the total banking industry notional amount of derivatives, a total of 1,382 insured U.S. commercial banks and savings associations held derivatives at the end of fourth quarter 2020.
  • Derivative notional amounts decreased in the fourth quarter of 2020 by $14.8 trillion, or 8.3%, to $163.8 trillion.
  • Derivative contracts remained concentrated in interest rate products, which totaled $116 trillion or 70.8% of total derivative notional amounts.
  • The percentage of centrally cleared derivatives transactions decreased quarter-over-quarter to 35% percent in fourth quarter 2020.

OCC Reports Fourth Quarter 2020 Bank Trading Revenue