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Citi sees quarterly investment banking slide, markets business rise

Published 06/15/2022, 10:31 AM
Updated 06/15/2022, 11:35 AM
© Reuters. FILE PHOTO: People walk beneath a Citibank branch logo in the financial district of San Francisco, California July 17, 2009. REUTERS/Robert Galbraith/File Photo

(Reuters) -Citigroup global head of markets Andy Morton told an investor conference on Wednesday that he expected a decline of as much as 55% in the bank's investment banking business this quarter and an increase of over 25% in its markets business.

Citi was outperforming the S&P 500's bank index, up 1% on the day, with the company's shares last up 2.6% at $47.14 looking set for its second straight day of gains after a four-day sell-off in which it dropped more than 12%.

Morton, speaking during the webcast of a Morgan Stanley (NYSE:MS) conference, said a slump in issuance and in mergers and acquisitions (M&A) due to the macro economic and geopolitical situation were behind the investment banking decline.

"Our belief is that the wallet is down 50%-55% in investment banking, and our assessment is that we're going to come in right around that those kind of levels," Morton said.

But he said Citi's markets business was a different story due to market volatility across all assets including commodities and foreign exchange, one of its key segments.

Morton said his current estimate was for a second-quarter year-over-year revenue increase "north of 25%" in markets, although the executive said volatility also meant the situation could change quickly.

"Just given the volatility, you know, even in two weeks, when you're having moves like we're having in the last few days or so, that number could obviously fluctuate," he said, adding corporate activity was up about a third for the second quarter.

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Since Citi's fixed income markets business was much bigger than its equity business, the executive said Citi was looking for "low hanging fruit" to expand in equities, including seeking to secure equities business from its fixed income clients.

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