Commodities Revenue at Top 10 Banks Seen Dropping 14% This Year

Commodities revenue at Goldman Sachs Group Inc., Morgan Stanley (MS) and the other companies making up the 10 largest investment banks will fall 14 percent this year, according to analytics company Coalition Ltd.

Revenue will drop to $4.7 billion from $5.5 billion in 2012, Coalition said today in a report. In 2013’s first nine months, commodities revenue at the banks slid 18 percent from a year earlier to $4 billion, the report showed.

“Poor performance in investor products and power and gas continued into the third quarter,” Coalition said. “Oil revenues were in line with the first half and metals remained stable. Inventory financing activities were more robust.”

Declining revenue and regulatory scrutiny have banks including New York-based JPMorgan Chase & Co. (JPM), the biggest U.S. lender by assets, considering withdrawals from some raw-materials trading. U.S. lawmakers have questioned whether banks should be allowed to own physical commodities businesses.

JPMorgan generated the most first-half revenue from commodities among the 10 banks, followed by Goldman Sachs and Morgan Stanley, Coalition said in September. JPMorgan plans to exit owning and trading physical commodities, and Morgan Stanley held talks last year with Qatar’s sovereign-wealth fund on selling a stake in its raw-materials division.

Commodities revenue at the top 10 banks slid 20 percent to $2.7 billion in the first half, Coalition said Aug. 21.

Coalition is a unit of Mumbai-based Crisil Ltd. (CRISIL), whose main stockholder is credit-rating company Standard & Poor’s, part of McGraw Hill Financial Inc., Coalition’s website shows.

To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: John Deane at jdeane3@bloomberg.net

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