Banks’ fourth-quarter trading revenue of $14.8 billion was down 10.6% from the third quarter but up 26.7% from a year ago, the Office of the Comptroller of the Currency (OCC) said in a report Friday.
The agency’s Quarterly Report on Bank Trading and Derivatives Activities showed a $1.8 billion decline in fourth-quarter trading revenue but a $3.1 billion increase from more than a year earlier.
It said 1,202 insured institutions held derivatives in the fourth quarter (that’s down from 1,225 in the third quarter), but four large banks continued to dominate trading and derivatives activity in the U.S. commercial banking system.
Those four banks held 86.5% of the total banking industry notional amount of derivatives and 71.1% of industry net current credit exposure (NCCE), the report says.
Additionally, the report shows:
- Initial credit exposure from derivatives before netting decreased from the third to fourth quarters. NCCE grew $33 billion, or 14.1%, to $270 billion.
- Derivative notional amounts decreased in the fourth quarter by $32.2 trillion, or 14.7%, to $186.5 trillion.
- Derivative contracts totaled $125.9 trillion, or 67.5% of total derivative notional amounts. They remained concentrated in interest-rate products.