NEW YORK (Reuters) - Goldman Sachs Group Inc said Tuesday its commodities trading risk rose only slightly in the second quarter as it faced uncertain and less-liquid markets.
Value at Risk (VaR) for commodities at Goldman averaged $39 million per day in the second quarter, up 5 percent from the $37 million reported in the first quarter, latest financial results from Wall Street's top investment bank showed.
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VaR is an industry measure for how much of a bank's money is at risk on a day for trading a particular asset class. (For a factbox on Wall Street banks' commodities trading risk,
In the case of Goldman, commodities were the only area it took additional risks in the second quarter as it cuts its VaR in the trading of equities, currencies and interest rates.
Goldman does not break down its commodities revenue separately. But it said trading conditions were tough all around in the second quarter, especially in commodities.
Its trading activity -- led by its fixed income, currency and commodities (FICC) client execution businesses -- fell to $1.6 billion in the second quarter, from $4.3 billion in the first quarter and $3.4 billion a year.
"High levels of uncertainty and decreased levels of liquidity during the quarter contributed to difficult market-making conditions, particularly in mortgages and commodities, and prompted the firm to operate at generally lower levels of risk," Goldman said.
Goldman's net income rose during the second quarter but fell short of lowered market expectations as fixed income trading revenue tumbled. The biggest U.S. investment bank by assets earned $1.05 billion, or $1.85 per share, more than double the $453 million, or 78 cents per share, of a year earlier.
JPMorgan Chase, the No. 2 U.S. bank and a growing competitor to Goldman in commodities, also reported a higher risk for commodities in the second quarter versus reduced VaR in other asset classes. JPMorgan said its commodities risk rose to an average of $16 million per day, from $13 million in the first quarter.
(Reporting by Barani Krishnan; Editing by John Picinich)