NEW YORK, March 20 (Reuters) - Trading revenue at U.S. banks increased 73 percent last quarter, on a surge in trading of over-the-counter interest rate derivatives, according to a report on Wednesday by the Office of the Comptroller of the Currency.
U.S. commercial banks and savings institutions reported trading revenue of $4.4 billion during the last three months of 2012, up from $2.5 billion in the same period a year earlier.
Interest-rate trading revenue represented 95 percent of total trading revenue, and more than made up for sharp declines in commodities and foreign exchange trading, and a $713 million loss from trading in credit products.
Kurt Wilhelm, director of the Financial Markets Group at the OCC, said it was a record fourth quarter for U.S. banks.
“Reduced concerns about Europe and an improving U.S. economy led to increased risk appetite across the financial markets,” he said in a press release.
However, for the full year, trading revenue declined 30 percent from a record set in 2011, mainly due to $7.6 billion worth of losses from the trading of credit products.
The OCC’s report also showed that the notional amount of derivatives held by U.S. banks fell to $223 trillion, a 2 percent decline from the prior quarter. Derivatives are financial products whose values are pegged to other assets, including stocks, bonds and commodities.
JPMorgan Chase & Co, Citigroup Inc, Bank of America and Goldman Sachs Group Inc remained the four banks with the largest exposure to derivatives. Together, those four institutions represent 93 percent of the derivatives market measured by the OCC.