Bank revenues surge on trading over what Fed will do

‘Significantly Higher’

Both banks reported earnings today. London-based HSBC, which posts results on Aug. 5, was the third-biggest recipient of foreign-exchange revenue last year, JPMorgan estimates.

Deutsche Bank, continental Europe’s biggest lender, said second-quarter revenue from foreign-exchange trading rose on increased price swings and greater client activity. Overall profit fell 49% to 334 million euros ($443 million), from 656 million euros in the same period a year earlier.

UBS, the fourth-largest currency trader, said that increased volatility caused a decline in second-quarter earnings from its foreign-exchange business.

Revenue from currencies, rates and credit fell 42% to 362 million Swiss francs ($389 million), from 619 million francs in the first three months of this year, UBS said. The investment bank posted a pretax profit of 775 million francs, compared with a 92 million-franc loss a year earlier.

Goldman Sachs, located in New York, said this month that its currency-trading operation had “significantly higher” revenue in the second quarter than in the year-earlier period. Like most of its peers, the investment bank doesn’t break out foreign-exchange earnings.

‘Strong’ Activity

“Activity levels in our currency business remained strong as clients reacted to increased volatility, particularly in Asia,” Chief Financial Officer Harvey Schwartz said on a conference call with analysts.

Most banks lump earnings from their fixed-income, currencies and commodities divisions together.

Foreign-exchange trading for Group of 10 and emerging- market nations accounted for 15% of fixed-income revenue, or about $14 billion, for the 10 largest banks in 2012, according to an estimate from analytics firm Coalition. That’s down from 22% in 2011 when most rates and credit operations lost money, Coalition said.

U.K. currency-trading volumes rose to a record $2.55 trillion a day in April, 26% higher than in October, the Bank of England said yesterday, citing a twice-yearly survey.

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