Despite posting substantial revenue declines in many of its banking and trading divisions, Citigroup doesn't foresee any major cutbacks, and in fact plans to expand in areas ranging from equity banking to emerging markets.
In a conference call Tuesday, CEO Vikram Pandit said Citi is looking to staff up despite the string of revenue declines, in part to reduce its current dependence on fixed income. Fixed income markets revenues fell 12 percent for the quarter and 34 percent for the year. That's a worse performance than JP Morgan's, whose fixed-income markets business fell 8 percent in the fourth quarter and 14 percent for the year.
"We're building out our equities and commodities businesses," said Pandit, adding that the fourth-quarter equities decline was primarily due to weaker trading revenues related to derivatives activity and principal positions.
Citigroup's overall headcount during the fourth quarter was 260,000 compared with 265,000 in the year ago quarter, and 309,000 at the end of 2009. Compensation and benefits expenses dropped 1 percent quarter-to-quarter, to $6.19 million. They fell 2 percent year-over-year, with $24.4 million for all of 2010.
Citi's securities and banking divisions generally had a harsh fourth quarter. Investment banking advisory fell 7 percent, while debt underwriting rose 4 percent, the only positive performance for the unit. By contrast, Citi's equity underwriting revenues fell 43 percent to from the fourth quarter of 2009, to $404 million. However, Q4 2009 was unusually strong for equity, and Citi's 4Q 2010 equity revenues were still the highest it's posted for the entire year.
Pandit said he expects further expansion in emerging markets including Latin America, Asia and even Africa, while overall Citi "will continue to recruit top talent, building on key hires we made last year." He noted that much of Citi's most recent equity underwriting fees came from a burst of Asian IPOs.