Investment Banking Profits Triple at Citigroup

Citigroup, which this week handed more than 20 top executives tens of millions of dollars worth of stock, said net profits from its corporate and investment bank more than tripled to $6.9bn last year. The division's pre-tax profit margin quadrupled to 41%.

Corporate and investment banking profits in the year to the end of December surged from $2.04bn in 2004, when results were dragged lower by a $4.95bn settlement with investors in the bankrupt US telecoms group WorldCom.

Net revenues climbed 10% to $23.9bn, while expenses fell by a third to $14.1bn.

Citigroup's pre-tax profit margin in corporate and investment banking improved from 10.2% in 2004 to 41%. Its fourth-quarter margin was 48.3%.

Fourth-quarter profits from corporate and investment banking climbed a fifth to more than $2bn, marking the bank's best quarter in more than three years, on the back of a $375m after-tax gain from the release of reserves related to WorldCom and stock research litigation.

The division made as much in the final quarter as for the whole of the previous year.

A 25% surge in merger and acquisitions advisory revenues, which hit a record, helped to offset lower capital markets underwriting business.

Equity trading revenues rose 39%. A fall in commodities and structured finance business dragged fixed income trading revenues down 9%.

Group net profits rose by almost half to $24.6bn last year on the back of $4.8bn in gains from discontinued operations, including the sale last month of its asset management business, which generated a $2.1bn after-tax gain. The bank's fourth-quarter net profits increased 30% to $6.9bn.

Chuck Prince, chief executive of Citigroup, said in a conference call: "Corporate and investment banking is on an upward trend both in an absolute sense and a competitive sense, especially in equities and advisory. We are well positioned for growth in 2006 and beyond."

Citigroup ended last year at the top of the global equity underwriting league tables for the first time, according to Dealogic, the investment banking research provider.

Prince said: "We have traditionally had and are committed to having the best fixed income operation on the street. We are investing in that business and would expect our performance to reflect that in 2006."

Prince received deferred shares this week worth about $9.65m, bringing the value of his total shares in the bank to more than $73.9m, according to a filing with the Securities and Exchange Commission. However, that holding is small compared to that of Citigroup chairman Sanford Weill, who owns a stake worth more than $805m after receiving stock this week valued at $7.69m.

Other top executives awarded stock this week include chief financial officer Sallie Krawcheck, who received $4.25m worth of deferred shares, and Robert Rubin, former U.S. treasury secretary, who was awarded shares worth $6.76m.