LONDON, May 20 (Reuters) - Commodities revenue at the top 10investment banks slid by 28 percent in the first quarter afterpower and gas activity returned to normal levels after lastyear's jump, a consultancy said on Wednesday.
Revenue earned by leading banks from commodity trading,selling derivatives to investors and other activities in thesector declined to $1.6 billion in the first three months of theyear compared to the same period of 2014, London-based financialindustry analytics firm Coalition said.
"Revenues declined due to the absence of one-off gains inpower and gas. This weakness was partially offset by an increasein oil trading results," Coalition said.
Last year, a very cold winter in North America createdvolatility and boosted activity in power and gas while this yeartrading has increased in the oil sector due to a sharp fall andpartial recovery in prices.
Higher volatility in financial markets typically opens upmore trading opportunities.
The banks' commodities revenue climbed by 9 percent to $4.9billion during the whole of last year, reversing three years ofdeclines, due to increased activity in energy markets as oilwent into freefall.
Despite the recovery in top banks' commodities revenue lastyear, it was still just over a third of the $14.1 billion theyracked up in 2008 at the height of the commodities boom.
Many investors have shunned commodities in recent years dueto lacklustre performance and as the sector was buffeted byeconomic events, moving in step with other assets.
The 19-commodity Thomson Reuters/Core Commodity CRB index shed 18 percent last year and has dipped 1.7 percentso far in 2015.
Banks continued an exodus from commodities trading in 2014due partly to tougher regulation and higher capital requirementsafter the global financial crisis.
Coalition tracks the following banks: Bank of AmericaMerrill Lynch, Barclays, BNP Paribas,Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, MorganStanley and UBS.
For a story on banks' overall revenue. (Reporting by Eric Onstad, editing by David Evans)
Barclays (BARC)
