WASHINGTON — The Office of the Comptroller of the Currency said Friday that banks reported $9.8 billion of first-quarter trading revenue, after the industry reported $9.2 billion in losses for the previous quarter.
The OCC attributed the gain to seasonality and the declining values of bank trading liabilities.
"Bank trading revenues have a definite seasonal pattern, with the first quarter of each year often the strongest due to increased risk management activity by bank clients," said Kathryn Dick, deputy comptroller for credit and market risk.
Some of the gains already have faded, Dick said.
"Some of the positive impact on bank trading results in the first quarter has reversed in the second quarter, due to improving perceptions of bank credit health," she said. "That's a very positive development, but the increase in the value of trading liabilities from lower bank credit spreads means bank trading revenues will face strong headwinds in the second quarter."
The OCC's quarterly derivative report found that the net current credit exposure, the primary gauge of credit risk in derivatives, fell 13%, to $695 billion.
The notional amount of derivatives held by banks rose by $2 trillion, or 1%, in the first quarter, to $202 trillion.
The OCC attributed the increase to the continued migration of investment bank derivatives activity to the commercial banking system.
Interest rate contracts rose by $5 trillion, to $169 trillion, while credit derivatives fell 8%, to $15 trillion.
The number of commercial banks holding derivatives rose by 53% in the quarter, to 1,063.