Citigroup hit as its trading revenues slide

City A.M. Reporter
A SHARP drop in bond trading revenue pushed Citigroup fourth-quarter profit far below expectations, highlighting chief executive Vikram Pandit’s challenges in fully reviving the bank.

The earnings miss by Citigroup, which only survived the financial crisis thanks to a massive taxpayer bailout, stoked concern that the bank has yet to resolve the operational weaknesses that have plagued it for years.

Shares of the US’s third-biggest bank -- which have rallied strongly over the past year as the the US government gradually sold off its stake in the bank -- fell 5.3 per cent after it reported a net profit of $1.3bn (£814.6m).

The bank’s fixed-income revenue alone dropped 58 per cent from the third quarter – compared to a 7.9 per cent drop at larger rival JPMorgan Chase, which reported on Friday. “This was one of the weaker quarters for trading,” chief financial officer John Gerspach said, acknowledging Citi’s investment bank has also struggled in other areas like the M&A league tables.

But he argued that trading results tend to ebb and flow, adding that “one quarter doesn’t make a trend”. Gerspach also forecast that “key hires” made in 2010 would boost securities and trading performance in 2011. He added that the poor performance had come despite relatively strong volumes.