Global transaction banking revenues are headed for their strongest year on record in 2023 after reaching their highest-ever level in the first half of the year, according to Coalition Greenwich.

Revenues at the 10 largest global transaction banks rose 45% year over year to $22.7 billion in the six months to June 30, data compiled by the research firm in its latest sector index shows. Coalition Greenwich tracks Bank of America Corp., Barclays PLC, BNP Paribas SA, Citigroup Inc., Deutsche Bank AG, HSBC Holdings PLC, JPMorgan Chase & Co., Société Générale SA, Standard Chartered PLC and Wells Fargo & Co.

Growth is expected to stay strong in the second half of 2023, making it "the best year on record" for big global transactions banks, Eric Li, research director at Coalition Greenwich, told S&P Global Market Intelligence.

Big banks, which benefitted amid investors' flight to safety during the market turmoil in early 2023, continue to gain market share from smaller sector players, although trends have slowed over the summer, Li said.

Rising central bank interest rates were the key growth driver over the first half, boosting revenues at the banks' cash management business by 57% year over year, Coalition Greenwich's report shows. The trade finance business, on the other hand, was weaker than a year ago due to sluggish trade activity and a drop in commodity prices, according to the report.

Cash management revenue growth is set to remain strong until rates peak and start slowing down after that, according to Li.

On a regional basis, revenues in the Asia-Pacific recorded the strongest growth rate at 60% year over year, the data shows.

The revenue surge was driven by deposit balance growth in local currencies as well as rising margins, Li said.

Overall deposit balances across the banks in the sample declined to $2.45 billion in the first half from $2.48 billion in the first half of 2022. Yet deposit productivity — the ratio of net interest income to deposit balances — nearly doubled to $63 billion from $35 billion a year ago, owing to the higher interest rate environment.