Tuesday, September 24, 2013

Commodity Revenue at Top Banks Climbs in Asia as Loans Rise

Commodity revenue at the world’s top 10 investment banks advanced 9 percent in the Asia-Pacific region in the first half as financing increased for oil and metals producers in China, said Coalition.


Revenue rose to $380 million from about $350 million a year earlier as lending grew more than physical trading and investor-product sales, said Serge De Coster, head of the analytics company in the Asia-Pacific region.

Global revenue from raw materials fell 21 percent to $2.7 billion, it said. Banks in Asia are expanding commodity funding as demand for raw materials increases.

China’s economy, the biggest user of energy and metals, will grow 7.5 percent in 2013, more than four times the U.S. rate, economist estimates compiled by Bloomberg show.

The country overtook the U.S. as the largest energy consumer in 2009 and its share of world copper demand doubled to 40 percent now from 20 percent in 2005, according to the International Energy Agency and Barclays Plc.

“We’ve significantly increased our balance sheet for commodities financing,” said Stuart Smith, the head of Asian commodity sales and liability structuring at Deutsche Bank AG (DBK) in Singapore.

“Banks able to provide this range of services have seen a growth in the business,” he said by e-mail.

Crude oil rose 18 percent in New York this year to $108.59 a barrel, the best performer in the Standard & Poor’s GSCI index of 24 commodities.

The gauge rose 0.5 percent as the MSCI All-Country World Index of equities rallied 15 percent and the Bloomberg U.S. Treasury Bond Index lost 2.9 percent.

Goldman, JPMorgan

Commodity lending is the growth area for the world’s top banks, Singapore-based De Coster said in an interview Sept. 17.

Raw materials represented 6 percent of the $6.2 billion revenue from their fixed income, currency and commodity units in the Asia-Pacific region in the first half, said Coalition.

Credit Suisse Group AG has seen a lot of financing demand in metals and oil and has been in the business in Asia for four to five years, according to Jared Baker, head of regional commodities sales in Singapore.

The Coalition Index includes Goldman, Morgan Stanley (MS), Deutsche Bank, Credit Suisse, Bank of America Corp., Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. (JPM), UBS AG and BNP Paribas SA. BNP replaced Royal Bank of Scotland Group Plc, which was included last year.

Companies other than Deutsche Bank and Credit Suisse declined to comment.

JPMorgan ranked second after Wells Fargo & Co. (WFC) as the biggest lender to commodities companies in the second quarter globally, data compiled by Bloomberg show.

The total for the industry rose 13 percent to $188.6 billion from a year earlier.

bloomberg.com

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