Deutsche and UBS reported their second quarter results the final week of July. Both banks tucked away FX profitability within larger categories: Deutsche puts its within ‘Sales and trading (debt and other products)’, while UBS slips it into ‘Fixed income, currencies and commodities’, or FICC. The salient point is that while they both saw declines in these broader groups, the notes reveal FX stood out for performing well.
Deutsche reported Q2 income of €1.92 billion in ‘Sales and trading’, down from €3.35 billion for Q1 and €2.12 billion for Q2 ’09. The reference to FX says it all: “Despite challenging market conditions, revenues were a record for a second quarter in foreign exchange, and there were good results in money markets, rates and commodities. This performance was offset by lower revenues in credit and emerging markets”.
UBS reported Q2 FICC revenues of CHF1.7 billion ($1.6 billion), compared with CHF2.2 billion in Q1 and a CHF59 million loss in Q2 ’09, largely related to credit trading. Q2 ’10 performance was lower than Q1 “as global market conditions deteriorated, triggered by the eurozone crisis and increased economic concern.” Yet again FX did well but the overall FICC results were dragged down by other areas: “The return of high market volatility drove revenues in the foreign exchange business, however, this was more than offset by lower interest rate trading and structured revenues due to decreased client activity and general de-risking in the market.”
I’m sure UBS’s FX traders would like their performance to be called ‘getting it right’, rather than passed off as the product of higher volatility.
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