Citigroup Expects 55% Decline in Investment Banking Business This Quarter, Markets Business to Increase by 25%

Citigroup’s global head of markets, Andy Morton, predicted a sharp fall in the bank’s investment banking business, by as much as 55%, during the current quarter. In contrast, the bank’s markets business was expected to experience an increase in revenue of more than 25% during the same period. The prediction is due to a slump in issuance and in mergers and acquisitions, as well as macro-economic and geopolitical factors, which have caused the investment banking decline. Morton noted that the bank was looking to expand its equity business by securing it from its fixed income clients.

Citi’s shares were up 2.6% at $47.14, outperforming the S&P 500’s bank index, which was up by 1% on the day. The bank was on course for its second straight day of gains after a four-day sell-off in which it dropped over 12%.

Morton commented that market volatility across all assets, including commodities and foreign exchange, had led to growth in the bank’s markets business. He added that the current estimate was for a year-over-year revenue increase of more than 25% in markets during the second quarter. Morton also said that due to the volatility of the market, the situation could change quickly.

Citi’s fixed income markets business was found to be much bigger than its equity business. Therefore, Morton stated that the bank was looking for “low hanging fruit” to expand in equities. One of the strategies was to secure equities business from its fixed income clients.

Citigroup’s investment banking business is expected to decline by up to 55% this quarter, according to the global head of markets, Andy Morton. He attributes the slump to a decline in mergers and acquisitions and issuance caused by the economic downturn and geopolitical situation. However, Morton expects the bank’s markets business to increase by over 25% due to the volatility across all assets, including commodities and foreign exchange.

Morton also mentioned Citi’s expansion in the equities business to capitalize on the current market volatility. This pivot is essential for Citi’s long-term growth and to secure more equities business from its fixed income clients. This move is not unique to Citi, as other banks have also seen growth in the markets business due to the current volatility in markets. However, as the situation is highly unpredictable, Morton emphasized that the current estimation of growth could change quickly.