Citi’s traders split between haves and have-nots
It’s a mixed bag at Citi where its equities traders have enjoyed a bumper quarter, beating their peers at Goldman Sachs and JP Morgan, while the fixed income team is in the doldrums along with the rest of the street.
Citi has spent big to bolster its equities business and it’s paying off. Trading revenues surged 37% in the second quarter compared with a year ago, thrashing JP Morgan where revenues rose 13% and Goldman, where equity revenues fell 12%.
Citi said the strong quarter was driven by strong performance in derivatives and prime finance.
But Citi’s fixed income revenues fell 43% compared with the bumper quarter of 2020, in line with similar falls at Goldman (down 45%) and JP Morgan (down 44%), as both rates and spread products under-performed compared to the second quarter of 2020.
Another bright spot for Citi was its mergers and acquisitions business, where revenues jumped 77%, compared with 52% at JP Morgan. Goldman has so far beaten with pack with a 83% jump in M&A revenues, a perennial strong suit.
Equity underwriting was up 11% on the back of the boom in new listings, particularly those of special purpose acquisition companies, while debt capital markets revenues went in the opposite direction, falling 21% compared with last year’s record volume of debt issuance as companies scrambled to bolster balance sheets in the teeth of the pandemic.
The bank’s investment in its investment banking business drove up costs. In the six months to June 30, overall expenses in Citi’s institutional clients group, which houses its investment banking and global markets businesses, rose 6% “reflecting investments in transformation, along with other strategic investments,” but was offset by lower compensation as overall ICG revenues fell by 8%.