Publications:
Quarterly Derivatives Fact Sheet -- First Quarter 1998
Read Section: General.......Risk.......Revenue.....High-risk Mortgage Securities and Structured Notes
REVENUES
The Call Report data include revenue information regarding trading activities involving cash
instruments and off-balance sheet derivative instruments. The data also show the impact on net
interest income and non-interest income from derivatives used in non-trading activities. Note
that the revenue data reported in Table 7, Graphs 6a and 6b reflect figures for the first quarter
alone, and are not annualized.
Relative to the fourth quarter of 1997, commercial banks reporting derivatives contracts in the
first quarter of 1998 more than doubled their trading revenues from cash instruments and
derivatives activities. The revenue figures reported in the first quarter indicate that the banks
with derivatives realized approximately $2.7 billion in revenue from trading activities, with the
top eight banks accounting for 85 percent of this figure. In the first quarter, revenues from
interest rate positions increased by $533 million, generating $1.1 billion, while revenues from
foreign exchange positions increased by $82 million, to $1.4 billion. Banks also reported trading
revenues of $272 million from equity, commodity and other (i.e. emerging market debt) trading
positions in the first quarter. [See Table 7.]
Derivatives held for purposes other than trading did not have a significant impact on either net
interest income or non-interest income in the first quarter. Non-traded derivatives contributed
$128 million, or .14 percent to the gross revenues of banks with derivative contracts in the first
quarter. These figures reflect an increase of $50 million from the fourth quarter. These results
are only useful in the context of a more complete analysis of each bank's asset/liability structure
and risk management process.
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High-risk Mortgage Securities and Structured Notes
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