UK Bank Derivatives Balance Narrows to £9.9 Billion as Liabilities Outpace Assets
The net value of derivatives held by UK banks dropped to £9.9 billion in the second quarter, narrowing the gap between assets and liabilities to its smallest level since 2015, Risk.net reported. Gross derivatives liabilities rose 1.7% quarter on quarter to £3.18 trillion, while gross assets grew 0.8% to £3.19 trillion.
The Bottom Line
- Liability Expansion: Gross derivatives liabilities for UK financial institutions climbed 1.7% to reach £3.18 trillion in the second quarter.
- Asset Growth: Gross derivatives assets moved up at a slower pace of 0.8% to £3.19 trillion.
- Decade-Low Gap: The net derivatives balance narrowed to £9.9 billion, marking the smallest level since 2015.
Commodity and Equity Derivatives Drive the Q2 Shift
Here is the math behind the numbers. The sharp compression in the net derivatives balance was propelled primarily by movements within commodity and equity derivatives contracts.
Gross liabilities across the sector advanced to £3.18 trillion. At the same time, gross assets reached £3.19 trillion. But the balance sheet tells a different story regarding velocity—liabilities expanded by a quarterly rate of 1.7%, outpacing the 0.8% growth registered on the asset side.
Ten-Year Lows in Net Derivatives Spread
| Metric | Value | Quarter-on-Quarter Change |
|---|---|---|
| Gross Derivatives Assets | £3.19 trillion | +0.8% |
| Gross Derivatives Liabilities | £3.18 trillion | +1.7% |
| Net Derivatives Balance | £9.9 billion | Smallest since 2015 |
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Disclaimer: The information provided in this article is for educational and informational purposes only and does not constitute financial advice.
