Revenue from Citi's trading, fixed income and equities operations would likely drop by around 30% year-over-year, bank CFO Mark Mason said at the Morgan Stanley U.S. Financials, Payments and Commercial Real Estate Conference Tuesday.
“A mix of continued strong performance in equities, offset by fixed income, in light of the strong prior-year fixed income performance” will bring revenues down “in the low 30s or so” in the second quarter, Mason said.
Mason’s comments follow JPMorgan Chase & Co. CEO Jamie Dimon’s prediction of a slowdown in some businesses “after a year of pandemic-induced market volatility helped banks deliver a bumper crop of profits,” Bloomberg wrote. On Monday, Dimon said in the second quarter, JPMorgan’s trading revenue would decline 38% from a year ago.
Thanks to the stream of stimulus payments over the past year, consumers have been paying down their loans at high rates, Mason said, which has stunted overall loan growth for the bank’s U.S. card unit.
In all, revenue from the North American consumer business is likely to drop by roughly 15%, he said, adding that he expects the bank to release reserves it had set aside to cover loans. But Mason expects to see loan growth “start to pick up” in the second half of 2021.
Despite the grim outlook, Mason won’t be adjusting the bank’s full-year guidance for costs, which sees expenses climbing as much as 3%. The bank is also allocating money for transformation and strategically investing in areas including wealth and investment banking, Mason said.
“We're investing in our digital capabilities, and frankly we've been doing that for a number of years now and that has played to our benefit through this crisis,” Mason said. “We're now able to do digital onboarding with clients in over 50 countries. We're also investing in our instant payment capabilities. We’re able to offer that in 27 markets and that'll increase by another eight markets by the end of the year."