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OCC: Q4'18 bank trading revenue down 28.5% YOY

Trading revenue of U.S. commercial banks and federal savings associations was $4.17 billion in the fourth quarter of 2018, down 28.5% year over year.

The decrease was mainly due to a drop in equity revenue, with the recent quarter's figure at negative $43 million from $1.65 billion in the fourth quarter of 2017, according to the Office of the Comptroller of the Currency's quarterly report on bank trading and derivatives. Meanwhile, interest rate and foreign exchange revenue improved 9.4% to $4.41 billion from $4.03 billion.

Consolidated holding company trading revenue, which provides a more complete picture of the banking system's trading revenue, was likewise down year over year, according to the OCC. It slid to $5.70 billion in the fourth quarter of 2018 from the year-ago figure of $10.72 billion amid decreases in all instrument categories. Equity revenue dropped 88.6% year over year to $441 million, interest rate and foreign exchange revenue fell 25.5% to $4.91 billion, and commodity and other revenue slid 7.6% to $525 million.

Net current credit exposure, the primary metric used by the OCC to evaluate credit risk in bank derivatives activities, stood at $341 billion. This was 4.5% lower than the $357 billion recorded in the third quarter of 2018.

Four large banks — JPMorgan Chase & Co., Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp. — held 87.3% of the total banking industry notional amount of derivatives and 85.2% of industry net current credit exposure, according to the OCC.