Gold fuels big banks' bumper profits as oil bonanza fades

By Peter Hobson

LONDON, Nov 9 (Reuters) - Lower income from oil reduced
commodity-related revenues at the world's ten biggest investment
banks in the third quarter, but booming profits from precious
metals means they are still set for a bumper year, consultants
McKinsey CIB Insights said on Monday.

Big banks have almost doubled their earnings this year from
trading, selling derivatives and other activities in the
commodities sector thanks to price volatility, supply disruption
and a boom in trading since the coronavirus outbreak.

Massive swings in the price of oil, the
biggest market, drove profits earlier in the year, but gold
has taken over as the biggest earner as crude prices
stabilised.

A rush of interest in gold from investors and a fracturing
of the market after the virus stuck created lucrative
opportunities for banks.

The ten largest had net revenues of $1.5 billion over the
July-September quarter, McKinsey CIB Insights said, down from
$2.4 billion over April-June but up from $1.1 billion in the
third quarter of 2019.

For the first nine months of the year, their revenues were
$5.6 billion, up from $3.2 billion in 2019, McKinsey said.

Earnings from oil fell to $416 million in the third quarter
from $1.1 billion in the second, but were still up from $341
million in the third quarter of 2019.

Profits from precious metals, meanwhile, rose to $577
million from $457 million in the second quarter and $209 million
in the third quarter of 2019.

Revenues from power and gas and agricultural commodities
fell in the third quarter and income from industrial metals was
roughly stable.

The ten banks McKinsey CIB Insights tracks are Bank of
America, Barclays, BNP Paribas,
Citigroup, Credit Suisse, Deutsche Bank
, Goldman Sachs, HSBC, JPMorgan
, and Morgan Stanley.

(Reporting by Peter Hobson
Editing by Marguerita Choy)