Citi sees drop in Q4 markets and securities services revenue on quarterly basis
20 January 2021 US
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Citi has revealed markets and securities services revenues totalled $4.5 billion, according to its Q4 2020 results, representing an increase of 13 per cent on last year’s figure.
Although Citi reported year-on-year growth, markets and securities services revenues drop from $5.2 billion from Q3 2020.
In Q4, securities services revenues of $650 million were unchanged on a reported basis, says Citi, but up 2 per cent in constant dollars, as higher deposit and settlement volumes and growth in assets under custody were partially offset by lower spreads.
Fixed income markets revenues of $3.1 billion increased 7 per cent, as higher revenues across spread products and commodities were partially offset by lower revenues in rates and currencies, explains Citi.
Meanwhile, equity markets revenues of $810 million increased 57 per cent, driven by strong performance in cash equities, derivatives, and prime finance, reflecting strong client volumes and more favourable market conditions.
Elsewhere, the report revealed that for the full year 2020, net income came in at $11.4 billion on revenues of $74.3 billion, compared to net income of $19.4 billion on revenues of $74.3 billion for the full year 2019.
Revenues decreased 10 per cent from the prior-year period, which Citi say primarily reflected lower revenues in global consumer banking (GCB), institutional clients group (ICG), and corporate/other.
Net income declined 7 per cent from the prior-year period, driven by the lower revenues, an increase in expenses, and a higher effective tax rate, partially offset by the lower cost of credit.
Further highlights from the report revealed earnings per share of $2.08 decreased 3 per cent from the prior-year period, primarily reflecting the decline in net income.
Michael Corbat, Citi CEO, says: “We ended a tumultuous year with a strong fourth quarter. As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of COVID-19. For the year, we generated $11 billion in net income despite our credit reserves increasing by $10 billion as a result of the pandemic and the impact of CECL.”
Corbat also notes: “Looking back, I am proud of the progress the firm has made since I became CEO. We have streamlined our consumer business and embraced the shift to digital so we can serve our clients the way they want to be served. We have re-established Citi as a go-to bank for our institutional clients through our global network.
“Before the pandemic slowed our progress, we had steadily improved our returns and dramatically increased the return of capital to our shareholders. Notably, we went from having a one penny dividend to returning over $85 billion in capital since 2013 and we have reduced our share-count by 30 per cent. Jane has a great foundation to build upon and I am certain great things are in store for Citi and all its stakeholders,” Corbat concludes.
Corbat is set to retire in February and Jane Fraser has been named as his successor as new CEO.
Although Citi reported year-on-year growth, markets and securities services revenues drop from $5.2 billion from Q3 2020.
In Q4, securities services revenues of $650 million were unchanged on a reported basis, says Citi, but up 2 per cent in constant dollars, as higher deposit and settlement volumes and growth in assets under custody were partially offset by lower spreads.
Fixed income markets revenues of $3.1 billion increased 7 per cent, as higher revenues across spread products and commodities were partially offset by lower revenues in rates and currencies, explains Citi.
Meanwhile, equity markets revenues of $810 million increased 57 per cent, driven by strong performance in cash equities, derivatives, and prime finance, reflecting strong client volumes and more favourable market conditions.
Elsewhere, the report revealed that for the full year 2020, net income came in at $11.4 billion on revenues of $74.3 billion, compared to net income of $19.4 billion on revenues of $74.3 billion for the full year 2019.
Revenues decreased 10 per cent from the prior-year period, which Citi say primarily reflected lower revenues in global consumer banking (GCB), institutional clients group (ICG), and corporate/other.
Net income declined 7 per cent from the prior-year period, driven by the lower revenues, an increase in expenses, and a higher effective tax rate, partially offset by the lower cost of credit.
Further highlights from the report revealed earnings per share of $2.08 decreased 3 per cent from the prior-year period, primarily reflecting the decline in net income.
Michael Corbat, Citi CEO, says: “We ended a tumultuous year with a strong fourth quarter. As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of COVID-19. For the year, we generated $11 billion in net income despite our credit reserves increasing by $10 billion as a result of the pandemic and the impact of CECL.”
Corbat also notes: “Looking back, I am proud of the progress the firm has made since I became CEO. We have streamlined our consumer business and embraced the shift to digital so we can serve our clients the way they want to be served. We have re-established Citi as a go-to bank for our institutional clients through our global network.
“Before the pandemic slowed our progress, we had steadily improved our returns and dramatically increased the return of capital to our shareholders. Notably, we went from having a one penny dividend to returning over $85 billion in capital since 2013 and we have reduced our share-count by 30 per cent. Jane has a great foundation to build upon and I am certain great things are in store for Citi and all its stakeholders,” Corbat concludes.
Corbat is set to retire in February and Jane Fraser has been named as his successor as new CEO.
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