Citigroup Reports 21% Drop in Q4 Fixed Income Trading

Bright spots included a 47 percent jump in revenue from advising on mergers and acquisitions, which reached $463 million. The bank's treasury and trade solutions business, which helps corporations move money around the world, boosted revenue 7 percent to $2.4 billion — surpassing the firm's fixed-income traders for the first time. They only generated $1.94 billion — falling below $2 billion for the first time since the final quarter of 2011. It was their worst performance under 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. When news of the turnaround broke, it helped send the stock up as much as 4.2 percent that day.

Read more about Citigroup feeling pain from hedge fund woes

But by early December, Gerspach said the momentum was fading, particularly in Group of 10 rates trading. Asked Monday what other products were affected by volatility, the CFO joked "everything," but he pointed in particular to foreign exchange and spread products.

Revenue from Citigroup's sprawling credit-card unit, the largest in the world, increased 1 percent to almost $5.1 billion during the quarter. Investors have grown increasingly worried about the business as rising interest rates have tempered consumers' demand for such loans. Citigroup has been curtailing its promotional offers while encouraging existing customers to maintain balances on their cards.

2019 Goal

The lender said it still believes it can achieve a return on tangible common equity of 12 percent in 2019, up from 10.9 percent last year.

The bank's efficiency ratio, a measure of how much it costs to produce a dollar of revenue, dropped to 57.4 percent last year, 86 basis points better than the prior year. The company had been aiming to shave 100 basis points from that measure last year, but Gerspach said in December the move might be closer to a 90 basis-point decline.

JPMorgan Chase & Co. and Wells Fargo & Co. are set to report quarterly results Tuesday, with Bank of America Corp., Goldman Sachs Group Inc. and Morgan Stanley due later in the week.

Here are other key numbers from the third quarter: 

• Net income amounted to $4.3 billion, or $1.64 a share, after a loss in the same period in 2017, when the company booked a $22.6 billion tax-related charge
• Excluding an additional one-time tax-related gain, Citigroup posted per-share profits of $1.61 a share, topping the $1.55 average of analyst  estimates compiled by Bloomberg.
• The bank's total revenue of $17.1 billion missed analysts' estimates of about $17.5 billion. The bank's equity traders posted $668 million in revenue, an 18 percent increase from a year earlier.
• Last year's fourth quarter suffered from a $130 million loss tied to the embattled South African retailer Steinhoff International Holdings NV.
• Revenue from bond underwriting fell 13 percent to $634 million, a smaller drop than analysts predicted, while stock underwriting slumped 28 percent to $181 million. That was worse than what analysts anticipated, bringing total underwriting below their estimates as well.
• The cost of credit within the consumer-banking unit climbed 1 percent during the quarter, driven by an increase in net credit losses in the unit, which the bank blamed on higher usage of its North American credit cards.

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