February 16, 2018 / 12:24 AM / 4 months ago

Top banks' 2017 commodities revenue drops 42 percent to lowest since 2006

LONDON (Reuters) - Commodities-related revenue at the 12 biggest investment banks fell by 42 percent last year to its lowest since at least 2006, a report by financial industry analytics firm Coalition said on Friday.

Workers are seen in at Barclays bank offices in the Canary Wharf financial district in London, Britain, November 17, 2017. REUTERS/Toby Melville

Revenue from commodity trading, selling derivatives to investors and other activities in the sector fell to $2.5 billion (1.78 billion pounds) in 2017 from $4.3 billion the previous year, it said in a report.

“Low volatility and subdued client activity, coupled with trading underperformance witnessed in 1H17, led to the overall decline,” it said.

Revenue was the lowest since Coalition began analysing bank data in 2006, it said.

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.

A number of firms suffered heavy losses in the first half of 2017 after a slide in natural gas prices NGc1, while others lost money in the second half due to swings in oil prices during Hurricane Harvey, analysts have said.

Coalition did not mention individual banks, but in the second quarter Goldman Sachs (GS.N) posted the weakest commodities results in its history as a public company.

Coalition tracks Bank of America Merrill Lynch (BAC.N), Barclays (BARC.L), BNP Paribas (BNPP.PA), Citigroup (C.N), Credit Suisse (CSGN.S), Deutsche Bank (DBKGn.DE), Goldman Sachs (GS.N), HSBC (HSBA.L), JPMorgan (JPM.N), Morgan Stanley (MS.N), Societe Generale (SOGN.PA) and UBS (UBSG.S).

Reporting by Peter Hobson, editing by David Evans

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