Citi reports double-digit Q2 decline in investment banking and markets revenue

The bank’s total services revenue is up 15% from last year, amid growth in net interest income and non-interest revenue.

Citi’s second quarter results have revealed a 13% decrease in markets revenues – following a strong Q2 last year – as both fixed income and equities saw a drop. 

Overall, the bank reported its net income for the second quarter of 2023 at $2.9 billion – in comparison to $4.5 billion in Q2 2022.

Citi’s chief executive, Jane Fraser, highlighted that clients had “stood on the sidelines” since April, as the US debt limit played out. The bank also highlighted low volatility in the quarter as a contributor to the market revenue performance.

Fixed income markets revenues were down 13%, while equity markets saw a 10% decrease – a reflection of the decline in equity derivatives, according to Citi.

Additionally, due to lower revenues in both investment banking and corporate lending, banking revenues of $1.2 billion decreased 22% from this time last year. Specifically, investment banking revenues decreased 24% amid a continually challenging macroeconomic environment, which the bank stated has continued to impact client activity.

The bank also posted a decrease in corporate lending revenues which it confirmed was driven by lower volumes.

“Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet. Our services businesses continued to deliver strong revenues,” said Fraser.

Looking to where the bank’s attentions lie going forward, Fraser said: “We remain laser-focused on executing our strategy while continuing to simplify and modernise our bank. We are on track with the plan we laid out at Investor Day and remain committed to reaching our medium-term return targets.

“We ended the second quarter with a CET 1 ratio of 13.3%, which was 100 basis points above our new regulatory requirements that goes into effect in the fourth quarter. We returned a total of $2 billion in capital to our shareholders through common dividends and share buybacks and we will continue to review our level of capital return on a quarter-to-quarter basis.”

Over the three months, the bank announced a number of changes to personnel, the latest of which the appointment of Citi veteran Flavio Figueiredo as global head of foreign exchange, earlier this month. According to an internal memo seen by The TRADE, he took over with immediate effect from interim head Leo Arduini.

Stuart Staley who previously held the position, announced that he was set to leave the bank after almost 20 years this April, having joined in 2004.

The bank also recently received a notice from The UK’s Competition and Markets Authority (CMA) back in May, confirming that Citi, along with four other banks – Royal Bank of Canada, Deutsche Bank, HSBC, and Morgan Stanley – had been provisionally found to have broken competition laws.

The CMA report found that in the aftermath of the global financial crisis, each bank “unlawfully shared competitively sensitive information” over a four-year period on one or more occasions. Currently, the CMA is awaiting representations from the parties in question should they so wish to make them.