Citi Sees Trading Revenue Dropping After Last Year’s Wild Ride

Citigroup Inc. said trading revenue is likely to fall in the first quarter as the firm’s traders struggle to top last year’s outsize performance.

Revenue from trading stocks and fixed-income products will drop by a percentage in the mid-single digits from a year ago, when the coronavirus pandemic sparked volatility in markets, according to Chief Financial Officer Mark Mason. Investment-banking revenue, on the other hand, has been helped by the firm’s business of underwriting initial public offerings and will probably climb by a percentage in the high teens or low 20s, he said.

“I think we’re off to a very good start to the year,” Mason said Thursday at a virtual investor conference. “The quarter’s not over.”

Citigroup and its Wall Street rivals have begun to warn that trading revenue is starting to moderate amid less market volatility in recent months. JPMorgan Chase & Co. CFO Jennifer Piepszak said at the same conference earlier Thursday that her bank has generated more trading revenue this year than in the same period of 2020, but didn’t want to make predictions for the first quarter because “we’re heading into a much more challenging” comparison to year-earlier figures for March.

Shares of Citigroup briefly traded lower after Mason warned that costs would tick up by a percentage in the mid-single-digit range this quarter as it invests in improving risk-management technology. That’s part of the work the company is doing to resolve a pair of consent orders from the Office of the Comptroller of the Currency and the Federal Reserve that Citigroup received last year.

Mason said Citigroup is continuing to take a clinical look at each of its businesses as it seeks to simplify. As part of that work, the firm recently decided to combine its private-bank and wealth-management operations, and is considering divesting certain consumer units in Asia.

“Part of the strategic refresh is to look not just at wealth, not just at Asia, but look across the business,” Mason said. “More to come as we continue to make progress on the work there.”

Citigroup shares slipped 1% to $67.95 at 2:40 p.m. after earlier dropping as much as 2.5%. The stock has climbed 10% this year, compared with the 12% advance of the 65-company S&P 500 Financials Index.

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