Citigroup Inc, the top foreign exchange bank in terms of market share, said third-quarter currency trading revenue rose 43 percent, boosted by bets US and European interest rates would fall.
The trading revenue grew to US$288 million from US$202 million in the quarter a year earlier, the largest US financial services company said. Currency trading has generated US$1.04 billion of revenue at Citigroup so far this year, a third more than in last year's first three quarters.
"We had a strong trading quarter," said Richard Moore, the bank's global foreign exchange manager. "We were correctly positioned for a slowing environment in the US and Europe."
The bank used contracts such as currency forwards to anticipate a drop in interest rates that came with the slowdown.
Two of the US Federal Reserve's nine interest-rate cuts this year came in the third quarter, reducing rates three quarters of a percentage point. The European Central Bank lowered interest rates by the same amount in the period.
Citigroup handles 9.7 percent of the US$1.2 trillion in currencies traded daily, according to Euromoney magazine.
Frankfurt-based Deutsche Bank, No. 2 with 9.1 percent of the market, reports earnings next month.
Foreign exchange accounted for about 1.4 percent of the US$20.3 billion in total revenue the bank declared for the quarter.
Profits at Citigroup fell 8.6 percent in the third quarter because of insurance and investment losses related to the Sept. 11 terrorist attacks, the bank said Wednesday.
JP Morgan Chase & Co, the second-biggest US bank, also reported quarterly earnings this week and didn't break out foreign exchange revenue. Spokespeople for the bank said currency officials weren't immediately available for comment.
Citigroup expects a "long-term upward slope" in currency trading profits as more companies using the bank for services turn to it for foreign exchange, Moore said.
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