Citi beats on earnings, misses on revenue as trading gets whacked (C)

Michael Corbat

Citigroup reported fourth-quarter earnings Monday, beating expectations with adjusted earnings of $1.61 per share. 

Analysts had expected the bank to report earnings per share of $1.55.

But the bank missed on revenues, which fell 2% compared with last year, as fixed-income trading got whacked amid the market turmoil, falling 21%.

The bank also missed on its full-year target of a 100-basis-point improvement in operating efficiency, improving 86 basis points to 57.4%.

Here’s what else you need to know:

  • Revenue: $17.1 billion, missing expectations of $17.6 billion.
  • Adjusted net income: $4.2 billion, beating expectations of $3.7 billion.
  • Trading: Overall markets revenues fell 11% to $3.1 billion. Equities gained 18% to $668 million, while fixed-income, currencies, and commodities, fell 21% to $1.9 billion.
  • Investment banking: Revenues fell slightly to $1.3 billion. Advisory jumped 47% but underwriting fees lagged.
  • Global consumer banking: $8.4 billion in revenues, up slightly from last year.

“A volatile fourth quarter impacted some of our market sensitive businesses, particularly Fixed Income. However, our ICG accrual businesses – Treasury and Trade Solutions, Securities Services, Private Bank and Corporate Lending – continued their strong performance. And in Global Consumer Banking, we had good underlying growth in U.S. Branded Cards and solid performance from our franchise in Mexico where we have been investing. For 2019, we remain committed to delivering a 12% RoTCE and continuing to improve our operating efficiency during the year,” CEO Michael Corbat concluded.

Citi isn’t expected to be alone in posting lackluster trading and investment banking numbers.

The worst December stock-market performance since the Great Depression has big banks — whose shares fell 18% during the last quarter — bracing for more pain. Analysts at Keefe, Bruyette, and Wood have predicted an 18% overall drop in investment banking fees, primarily in underwriting, and a 2.6% drop in trading, mostly in fixed income, currencies, and commodities, in the fourth quarter.  

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Source: Business insider

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