Citi’s Institutional Clients Group reports slight drop in Markets revenues in Q1 2022
Citigroup Inc (NYSE:C) has just posted its financial report for the first quarter of 2022.
Institutional Clients Group (ICG) revenues for the first three months of 2022 amounted to $11.2 billion, down 2%, largely driven by Investment Banking, partially offset by an increase in Services revenue. The result was better than the result of $9.9 billion registered in the final quarter of 2021.
Services revenues of $3.4 billion increased 15% versus the prior year. Treasury and Trade Solutions revenues of $2.6 billion increased 18%, driven by net interest income on higher deposits balances and spreads as well as strong fee growth. Securities Services revenues of $858 million increased 6%, as net interest income grew 17%, driven by higher interest rates across currencies, and fee revenues grew 2% due to higher assets under custody.
Markets revenues of $5.8 billion were down 2% versus a strong quarter in the prior year. In the quarter, activity levels benefited from client repositioning and strong risk management, driven by the Federal Reserve’s interest rate increases and overall geopolitical and macroeconomic uncertainty.
Fixed Income Markets revenues of $4.3 billion decreased 1%, as strong client engagement in FX, commodities, and rates was offset by less activity in spread products. Equity Markets revenues of $1.5 billion were down 4% compared to a very strong quarter in the prior year period, reflecting strong equity derivatives performance and growth in prime finance balances.
ICG net income of $2.6 billion decreased 51% from the prior year, largely driven by the higher expenses and the higher cost of credit.
Across all segments, net income for the first quarter 2022 was $4.3 billion, or $2.02 per diluted share, on revenues of $19.2 billion. This compared to net income of $7.9 billion, or $3.62 per diluted share, on revenues of $19.7 billion for the first quarter 2021.
Revenues decreased 2% from the prior-year period, as higher net interest income driven by Services in Institutional Clients Group (ICG) and Personal Banking and Wealth Management (PBWM) was more than offset by lower non-interest revenue across businesses.
Net income of $4.3 billion decreased 46% from the prior-year period, driven by higher cost of credit, higher expenses, and the lower revenues. Results for the quarter included Asia Consumer divestiture-related impacts of approximately $677 million ($588 million after-tax), recorded in Legacy Franchises.
Earnings per share of $2.02 decreased 44% from the prior-year period, reflecting the lower net income, partly offset by a 6% decline in shares outstanding.
Citi CEO Jane Fraser said:
“Given our emphasis on Services, I am particularly pleased with our performance in Treasury and Trade Solutions. Fee growth, trade loans and cross-border transactions — buoyed by higher rates — led to year over year revenue growth of 18%. Securities Services also performed well, with revenue up 6%. In Markets, our traders navigated the environment quite well, aided by our mix, with strong gains in FX and commodities. However, the current macro backdrop impacted Investment Banking as we saw a contraction in capital market activity. This remains a key area of investment for us.”