Citi profits fall on poor bond market results

 
Tim Wallace
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CITIGROUP profits fell in the third quarter, the banking group reported yesterday, with bond trading down after the Federal Reserve surprised the market with the sustained pace of its money printing.

Net income came in at $3.23bn (£2bn), down 16 per cent from $3.89bn in the previous three-month period and flat on the year.

Revenues fell 13 per cent on the quarter to $18.22bn, while expenses edged down four per cent to $11.66bn.

Consumer banking profits fell 23 per cent on the year and 17 per cent on the quarter to $1.62bn, led by the US where revenues dipped 12 per cent compared with the third quarter of 2012.

Net income in securities and banking fell 43 per cent on the quarter and 29 per cent on the year to $1.2bn.

Investment banking revenues fell 10 per cent on the year to $839m, driven by a 26 per cent fall in fixed income revenues which fell to $2.8bn. That drop came in part from the Federal Reserve’s surprise decision not to slow down its bond buying purchase.

Debt underwriting revenues fell 10 per cent to $498m while advisory revenues fell 15 per cent to $167m.

However equity underwriting revenues rose 22 per cent to $174m.

“We performed relatively well in this challenging, uneven macro environment,” said chief executive Michael Corbat yesterday.

“While many of the factors which influence our revenues are not within our full control, we certainly can control our costs and I am pleased with our expense discipline and improved efficiency year-to-date.”

Return on equity came in at 6.4 per cent, down from 8.8 per cent in the second quarter but up from one per cent a year ago.

Headcount fell 10,000 or four per cent from 262,000 a year ago to 252,000 in the third quarter of this year.

The bank’s stocks ended the day down 1.5 per cent at $48.86.