Top banks' first quarter commodities revenue jumps 48 percent: report

LONDON (Reuters) - Commodities-related revenue at the 12 biggest investment banks in the first quarter jumped 48 percent year on year driven by the U.S. energy sector and commodity indices, consultancy Coalition said on Thursday.

Revenue from commodity trading, selling derivatives to investors and other activities in the sector climbed to $1.2 billion, the financial industry analytics firm said in a report.

“Significantly higher U.S. power and gas results were driven by improved market conditions and some one-off transactions,” Coalition said.

“Investor products benefited from increased institutional client appetite for commodity indices.”

The rise in the first quarter comes after years of falling revenue in the sector for top banks, including a 42 percent fall last year to its lowest since at least 2006.

Revenue in the commodities sector at the 50 biggest investment banks was $4.3 billion last year, the lowest in more than a decade and down from $15.9 billion in 2008 at the peak of the commodities cycle, according to Coalition.

Banks’ commodity revenue has been on a steady downward path in recent years as they have exited or slimmed down their commodity businesses due to heightened government regulation and poor performance from the sector.

Many banks posted strong first-quarter results although typically they do not give figures for commodities.

One of the top commodity banks, Morgan Stanley, reported record first-quarter profit last month thanks to a surge in trading activity, much like other Wall Street banks, but executives warned results through the rest of the year may not be quite as strong.

Coalition tracks Bank of America Merrill Lynch, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan, Morgan Stanley, Societe Generale and UBS.

Reporting by Eric Onstad; editing by Jason Neely