OCC Reports Fourth Quarter 2016 Bank Trading Revenue Increased to $6 Billion

WASHINGTON—Trading revenue of U.S. commercial banks and savings associations increased to $6 billion in the fourth quarter of 2016, $1.7 billion higher than the fourth quarter a year earlier, according to a report released today by the Office of the Comptroller of the Currency (OCC).

Revenue grew 40 percent in the fourth quarter of 2016 from the same quarter a year earlier, according to data presented in the OCC's Quarterly Report on Bank Trading and Derivatives Activities. The OCC also reported that trading revenue in the fourth quarter fell slightly from the $6.4 billion reported in the third quarter 2016.

The largest driver of the year-over-year increase in trading revenue was interest rate and foreign exchange trading. Trading in interest rate products benefited from significant market moves in interest rates during the quarter, including a rise in the U.S. Treasury rate over the course of the quarter.

The OCC also reported:

• Trading risk, as measured by value-at-risk (VaR), decreased in the fourth quarter of 2016. Total average VaR across the top five dealer banking companies decreased $10 million from the previous quarter, or 3.6 percent, to $264 million.
• The percentage of centrally cleared derivatives transactions increased to nearly 39 percent in the fourth quarter of 2016, up from 37 percent in the fourth quarter of 2015.
• While the largest four banks held 89.3 percent of the total banking industry notional amount of derivatives, 1,420 U.S. commercial banks and savings associations held derivatives in the fourth quarter of 2016, down from 1,438 in the third quarter of 2016 and 1,410 in the fourth quarter 2015.

Related Link

• OCC's Quarterly Report on Bank Trading and Derivatives Activities: Fourth Quarter 2016