The Office of the Comptroller of the Currency's quarterly report on insured U.S. commercial banks and thrifts showed $6.9 billion in trading revenue in the second quarter, down 16.2% from the first quarter and 3.5% from the year-ago quarter.
Revenue at bank holding companies was $12.5 billion, down 33.2% from the first quarter and 17.3% from the year-ago quarter.
Credit exposure from derivatives also decreased in the second quarter, with net current credit exposure, the primary metric used by the OCC to evaluate credit risk in bank derivative activities, dropping to $361.7 billion. Although over 1,300 insured banks and thrifts reported derivatives at the end of the second quarter, the top four banks by derivatives holdings control 89.9% of the derivatives market. All four banks' derivatives holdings dropped in the second quarter. Citigroup Inc. reported a 26.0% quarter-over-quarter drop to $139 billion, the largest percentage drop of the four banks.
Meanwhile, notional amounts of derivatives contracts increased to $207.2 trillion from the previous quarter, a gain of $3.4 trillion. Swap contracts represent 52.1% of all notional amounts and led the increase in notional amounts of derivatives contracts. Seventy-six percent of total derivative holdings, or $157.4 trillion, were interest rate notional amounts.
The report also measures trading risk using daily value-at-risk, or VaR, at all U.S. banks and thrifts. This trading risk decreased in the second quarter, with the top five companies' VaR decreasing 13.6% to $267 million.