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Rates, weak forex cut into trading revenue at U.S. banks: OCC

Published 09/21/2015, 03:11 PM
© Reuters. U.S. Comptroller of the Currency Thomas Curry looks on during the Reuters Financial Regulation Summit in Washington

(Reuters) - Insured U.S. commercial banks earned 28.1 percent less in trading revenue in the second quarter compared with first quarter, squeezed by low interest rates and weak currency trading, the Office of the Comptroller of the Currency said.

The banks' trading revenue fell by $2.2 billion from the first quarter to $5.5 billion and 14.2 percent from the second quarter of 2014, the OCC said in a report on Monday.

The OCC, an independent bureau of the U.S. Treasury Department, regulates all U.S. banks and federal branches of foreign banks.

The 28.1 percent decline compared with an average fall of 25 percent for each second quarter since 2009, Kurt Wilhelm, director of the OCC's Financial Markets Group, said in a statement accompanying the report.

Trading will struggle to keep pace with historical numbers until revenue increases from interest rate and foreign exchange products, he added.

Revenue from interest rate products rose 18 percent to $3.4 billion, while revenue from foreign exchange products fell 58 percent to $855 million.

Revenue from the two combined was 4 percent below the average figure for second quarters since 2009.

© Reuters. U.S. Comptroller of the Currency Thomas Curry looks on during the Reuters Financial Regulation Summit in Washington

Net current credit exposure, the primary metric the OCC uses to measure credit risk in derivatives activities, fell 19 percent compared with the first quarter, to $406 billion.

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