| 5.6°C Dublin

Wild volatility at end of 2018 takes toll on Citi

Close

Bright spots for Citigroup included a 47pc jump in revenue from advising on mergers and acquisitions, which reached $463m (€404m). Photo: PA

Bright spots for Citigroup included a 47pc jump in revenue from advising on mergers and acquisitions, which reached $463m (€404m). Photo: PA

Bright spots for Citigroup included a 47pc jump in revenue from advising on mergers and acquisitions, which reached $463m (€404m). Photo: PA

CITIGROUP results yesterday gave investors a grim first look at how Wall Street banks fared during the violent market swings at the end of 2018.

Revenue from fixed-income trading, the lender's largest securities business, plunged 21pc in the fourth quarter to its lowest in seven years after wild markets kept clients on the sidelines.

Combined revenue from stock and bond underwriting dropped more than analysts estimated. And the company missed a full-year profitability target by an even wider margin than it signalled just five weeks ago.

"A volatile fourth quarter impacted some of our market- sensitive businesses, particularly fixed income," Citi chief executive Michael Corbat said in a statement disclosing results. The firm will focus on improving profitability this year, he said.

Bank shareholders have been in the dark for weeks, eager to learn whether traders and dealmakers were able to navigate global market swings including the biggest monthly drop in the S&P 500 Index since 2009.

Analysts including Barclays' Jason Goldberg had cautioned clients that Citigroup's most recent guidance came in early December, before the storm worsened.

Bright spots for Citigroup included a 47pc jump in revenue from advising on mergers and acquisitions, which reached $463m (€404m).

The bank's treasury and trade solutions business, which helps corporations move money around the world, boosted revenue 7pc to $2.4bn - surpassing the firm's fixed-income traders for the first time.

They only generated $1.94bn - falling below $2bn for the first time since the final quarter of 2011.

It was their worst performance under Mr Corbat.

Just three months ago, things were looking brighter for the fixed-income division, which handles bonds, commodities and currencies.

In mid-October the bank disclosed that the business had snapped five straight quarters of declining revenue.

But by early December, the bank's chief financial officer John Gerspach said the momentum was fading.

Yesterday, the bank also blamed widening credit spreads. Revenue from Citigroup's sprawling credit-card unit, the largest in the world, increased 1pc to almost $5.1bn during the quarter.

Investors have grown increasingly worried about the business as rising interest rates have tempered consumers' demand for such loans.

Bloomberg

Irish Independent