Citigroup posted sales in the fourth quarter that missed analyst estimates by half a billion dollars, as bond trading income declined in a difficult December for the markets.
Citigroup said in early December that trading revenue was likely to decline in choppy markets a year ago. In particular, the fixed-income trading tables fought in the face of currency and interest rate fluctuations.
Trading conditions worsened, however, according to the company's guidance of 5 December, as asset classes worldwide declined sharply. The company's total trading revenues declined 14 percent as the improvement in equity earnings was overwhelmed by the failure of bond trading.
The company missed a performance target by more than expected due to the revenue shortfall: Operating efficiency improved by 86 basis points to 57.4 percent year on year, failing the bank's 100 basis points target. However, total return expectations were met: Citigroup returned 10.9 percent on tangible capital, outperforming its 10.5 percent target.
Another focus at Citigroup, the third largest US asset lender, will be on any guidelines that CEO Michael Corbat or CFO John Gerspach will give on revenue and growth expectations for 2019 and beyond. Recently, companies from Apple to Starbucks lowered expectations for the year as profits weaken globally.
Gerspach retires in March and will be replaced by Mark Mason, CFO of the firm's institutional client group. The bank has upset other executives over the past year, given the bank's disappointing performance. This includes the departure of global credit card boss Judson Linville.
New York bank shares fell 30 percent last year, which was worse than the KBW Bank index's fall of 20 percent, worried that the bank's international operations might reveal this. According to Refinitiv