OCC Data Reaffirm Wall Street Warning
WASHINGTON -- A U.S. regulator said banks' trading revenue declined 16% in the first quarter compared with the same period last year, the latest sign of a slowdown in a traditional Wall Street profit engine.</br></br>Bank holding companies reported trading revenue of $16.8 billion in the first quarter, down $3.3 billion from first quarter of 2013, the Office of the Comptroller of the Currency said in a quarterly report. This year's first-quarter revenue also was 23% less than the average for the same quarter over the previous five years, driven by lost revenue from equities as well as interest-rate and foreign-exchange products, the OCC said. In May, some big banks warned that a slump in trading revenue would deepen in the second quarter.</br></br>"The extended period of both low interest rates and low volatility has weakened client demand for risk management transactions," Kurt Wilhelm, director of the OCC's Financial Markets Group, said in a statement.</br></br>Overall, banks reduced their exposure to derivatives, but two institutions -- Citigroup Inc. and Goldman Sachs Group Inc. -- reported increases in "value at risk," a measure of the maximum expected loss in a trading day.</br></br>Credit: By Ryan Tracy and James Sterngold