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BREAKING NEWS

Citigroup reports surprise drop in quarterly revenue, shares slip

Citigroup reports surprise drop in quarterly revenue, shares slip
The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. Picture taken October 19, 2017. REUTERS/Chris Helgren -
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CHRIS HELGREN(Reuters)
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(Reuters) - Citigroup Inc reported a surprise drop on Monday in quarterly revenue due to a steep decline in its fixed income trading business, hurt by volatility in financial markets at the end of the year.

Shares of the company fell nearly 1.6 percent to $55.80 in early trading.

"A volatile fourth quarter impacted some of our market sensitive businesses, particularly fixed income," Chief Executive Officer Michael Corbat said in a statement.

Fixed income revenue fell 21 percent in the quarter due to widening credit spreads. The squeeze on revenue caused Citi to narrowly miss its efficiency target for the year, despite a 4 percent decline in expenses.

The bank ended the year with an efficiency ratio of 57.4 percent, just shy of its 57.3 percent goal. A lower efficiency ratio means a bank is better at managing its overhead expenses as a percentage of revenue.

Despite missing its efficiency goals, Citi exceeded its target for returns on tangible common equity (ROTCE), a widely watched measure of how well banks use shareholder money. Citi reported a 2018 ROTCE of 10.9 percent, topping its goal of 10.5 percent.

Citi is the first of the major U.S. banks to report fourth-quarter results. Wall Street majors JPMorgan Chase & Co , Bank of America Corp and Goldman Sachs will report later this week.

Citi's results, however, may not be a good bellwether for most U.S. banks as it gets roughly half of its revenue from outside the United States.

Excluding a one-time tax related gain, quarterly profit rose to $4.22 billion (£3.2 billion), or $1.61 a share, in the quarter ended Dec. 31, from $3.70 billion, or $1.28 a share, a year earlier.

Revenue fell 2 percent to $17.12 billion. Analysts were expecting a 1.7 percent rise in revenue to $17.55 billion and a profit of $1.55 per share, according to IBES data from Refinitiv.

(Reporting by Imani Moise in New York and Siddharth Cavale in Bengaluru; Editing by Arun Koyyur)

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