Trading revenue at U.S. commercial banks and federal savings associations reached $7.06 billion in the third quarter, up 2.7% from the second quarter and 1.7% from the third quarter of 2017, according to the Office of the Comptroller of the Currency's report.
The increases were mainly due to higher interest rate and foreign exchange trading revenue, which grew 7.1% sequentially and 11.0% year over year to $5.13 billion.
Net current credit exposure, the OCC's primary metric to evaluate credit risk in bank derivative activities, decreased 1.4% to $356.61 billion. Trading risk, as measured by daily value-at-risk, decreased in the third quarter. Total VAR across the top five dealer banking companies decreased by 7.9% to $246 million.
Derivative notional amounts decreased by nearly $206.3 billion to $207.0 trillion, with the decline primarily driven by a $653.4 billion decrease in interest rate notional amounts. By contract type, swaps was the only type that decreased this quarter, posting a 2.9% decline.
Interest rate notional amounts represent the majority of banks' derivative holdings at $156.8 trillion, or 75.7% of total derivatives held by banks.