Banks Revenue Increased by $4bn in Q1

The trading revenue of US commercial banks and saving associations increased by $4 billion during the first quarter of 2024, according to the Officer of the Comptroller of the Currency (OCC).

The Quarterly Report on Bank Trading and Derivatives Activity revealed trading revenue of banks reached $15.6 billion, which represented a 34.2% increase from the previous quarter.

However, figures remained $2 billion or 11.1% lower than the first quarter of 2023.

According to the OCC, the quarter-over-quarter increase in trading revenue was due to increases in revenue from foreign exchange, equity and credit instruments.

The OCC said changes in banks’ notional amounts are reasonable reflections of business activity and can provide insight into potential revenue and operational issues.

During the first quarter of 2024, derivative notional amounts reached $206.1 trillion, which represented an increase of $13.6 trillion or 7.1%.

The report also revealed just four commercial banks represented 87.6% of the total banking industry notional amounts and 64.5% of industry net current credit exposure (NCCE).

By using NCCE as the primary metric to evaluate credit risk in bank derivatives activities, the OCC revealed credit exposure from derivatives rose in Q1 of 2024 compared to Q4 of 2023.

According to the report, NCCE increased by $11 billion, or 4.6%, to reach $251 billion.

The OCC said NCCE increased significantly during the first quarter of 2020 as markets responded to the financial impact of the Covid-19 pandemic but have now settled since normal activity resumed.