Citigroup's first-quarter results offer some comfort for the bank's traders, less for investment bankers.
While revenues across most areas in Citi's securities and banking segment posted steep declines compared with the 2009 first quarter, a different picture emerges when comparing the past quarter's numbers with more recent periods last year.
Citi's $1.06 billion total investment banking revenue (from advisory, equity and debt underwriting) was the softest since the first quarter of 2009. Meanwhile, equity markets revenue of $1.2 billion was the strongest in a year, while fixed-income markets revenue of $5.4 billion - while down 46 percent from the blowout 2009 first quarter - was on par with the solid 2009 second quarter, and well above last year's third- and fourth-quarter numbers. And the bank's corporate lending business posted its first positive revenue number since the fourth quarter of 2008, thanks to smaller losses on credit default swap hedges.
Strong Performance For All Fixed-Income Segments
Excluding an accounting offset known as a credit valuation adjustment (CVA) caused by Citi's own improved credit standing, first-quarter fixed-income market revenue was $5.1 billion, up 77 percent from $2.9 billion in the fourth quarter of last year. The increase reflects strong performance across interest rates and currencies, and credit and securitized products, Citi says. Equity market revenues excluding CVA grew 66 percent compared with last year's fourth quarter, reflecting higher overall market volumes and increased volatility.
Investment banking revenues declined 28 percent from the 2009 fourth quarter, mainly due to a decline in equity underwriting. Debt underwriting revenue climbed 17 percent sequentially, thanks to higher issuance volume. Advisory revenue dipped 6 percent to $198 million due to lower completed deal volume, reflecting a decline in market activity.
While Citi provides revenue breakouts for its business segments, its results don't break out headcounts or compensation by business unit. Company-wide, direct staff declined by 2,000 or 1 percent in the first quarter, to 263,000. Compensation and benefits expense dipped 2 percent sequentially (and dipped 1 percent from the year-ago quarter) to $6.16 billion. That places average compensation per employee at $23,430, down 1 percent from the fourth quarter but 4 percent above the 2009 first-quarter figure. Compensation as a percent of revenue came in at 24 percent, less than the 31 percent figure for all of 2009.