Top banks' commodities revenue jumps 45 percent in 2018 – report


© Reuters. FILE PHOTO – The logo of Barclays bank is seen at its office in the Canary Wharf business district of London

LONDON (Reuters) – Commodities-related revenue at the 12 biggest investment banks climbed 45 percent last year despite weak oil trading, boosted by power, gas and base metals markets, consultancy Coalition said on Wednesday.

Revenue from commodity trading, selling derivatives to investors and other activities in the sector, increased to $3.6 billion (2.7 billion pounds) in 2018, the financial industry analytics firm said in a report.

“Commodities revenues increased significantly, driven by strong performance in power and gas, one-off gains in base metals in 1H18 and higher results in investor products,” Coalition said.

“Oil had a weak year with significant declines throughout the year and a particularly poor 4Q18.”

The rise in 2018 comes after years of falling revenue in the sector for top banks, including a 42 percent fall in 2017 to $2.5 billion, its lowest since at least 2006.

The banks’ commodity revenue has been on a steady downward path in recent years as they have exited or slimmed down their commodity businesses due to heightened government regulation and poor performance from the sector.

It has slid from $15.9 billion in 2008 at the peak of the commodities cycle, according to Coalition.

The 12 banks Coalition tracks for its quarterly reports are Bank of America (NYSE:) Merrill Lynch, Barclays (LON:), BNP Paribas (PA:), Citigroup (NYSE:), Credit Suisse (SIX:), Deutsche Bank (DE:), Goldman Sachs (NYSE:), HSBC, JPMorgan (NYSE:), Morgan Stanley (NYSE:), Societe Generale (PA:) and UBS.

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