Commodity-Related Income Has Plunged At Large Banks

According to a report by Bloomberg, commodity-related revenue at the largest banks, including Goldman Sachs Group Inc (NYSE: GS), JPMorgan Chase & Co. (NYSE: JPM) and others, have plunged by a combined 40 percent year-over-year in the first three months of 2016.

Bloomberg cited data from analytics firm Coalition Ltd, which also revealed the first three months of 2016 mark the worst start to a year since 2005.

Coalition tracks commodities such as power and gas, oil, metals, coal and agriculture.

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Banks saw a sharp drop in revenue as the firms scaled back hedging and financing deals, while their hedge fund clients also pulled out of commodity investments.

"It was a very slow quarter," Amrit Shahani, a research director at Coalition told Bloomberg. "The issue with the credit rating of the energy companies really became a problem in 2015. It's come under a magnifying glass in 2016."

Coalition also noted that concerns over the energy industry resulted in a decrease in risk appetite, which slashed revenue from oil and industrial metals.

Meanwhile, combined revenue from raw materials fell 18 percent to $4.6 billion last year, marking the lowest level in more than a decade. This occurred as institutions scaled back or completely abandoned their commodities business.