OCC Reports Second Quarter 2017 Bank Trading Revenue

WASHINGTON—Trading revenue of U.S. commercial banks and savings associations fell to $6.7 billion in the second quarter 2017, $348 million, or 4.9 percent, lower than the previous quarter, according to a report released today by the Office of the Comptroller of the Currency (OCC).

In the report, Quarterly Report on Bank Trading and Derivatives Activities, the OCC also noted that trading revenue in the second quarter 2017 decreased by 4.5 percent compared with the $7 billion reported in the second quarter 2016. Combined interest rate and foreign exchange (FX) revenue led the quarterly decrease, with revenue decreasing $419 million to $5.2 billion. Since dealers often use interest rate contracts to hedge exposures in FX derivatives, it is useful to view these categories collectively. The decrease in these categories was partially offset by an increase in equity trading revenue.

The OCC also reported:

• Trading risk, as measured by value-at-risk (VaR), decreased in the second quarter 2017. Total average VaR across the top five dealer banking companies decreased $4 million from the previous quarter, or 1.4 percent, to $273 million.
• The percentage of centrally cleared derivatives transactions increased to 40 percent in the second quarter 2017, up from 39 percent in the second quarter 2016.
• While the largest four banks held nearly 90 percent of the total banking industry notional amount of derivatives, 1,418 U.S. commercial banks and savings associations held derivatives at the end of the first quarter 2017, up from 1,414 in the previous quarter.

Related Link

• OCC's Quarterly Report on Bank Trading and Derivatives Activities: Second Quarter 2017