Citi dragged down by investment arm
(4 April 2011 – Australia) Stephen Roberts, Citigroup’s Australian chief executive officer, holds hopes that stronger financial markets will aid the bank’s domestic banking operations of the bank’s investment arm in recovering from a major loss in 2010.
The loss, which overshadowed the strong performance of its retail bank, was revealed as part of the results for Citigroup Global Markets, which covers most of its trading businesses, equities and investment banking, and the financial accounts for the Australian operations of Citibank.
The retail bank’s profit rose from A$181.6 million in 2009 to A$261m, helped by a 35 percent increase in retail deposits and a fast growing credit card business.
Citi's credit cards are threatening to overtake National Australia Bank as the fourth-largest player in the market.
But the increase was offset by a A$126.6m loss in the investment banking business. The plunge into the red was a turnaround from the A$15.3m profit in 2009. Mr Roberts said the loss was driven by volatile equity market conditions in 2010, low trading volumes and a lacklustre corporate advisory market.
Despite the performance, Citi has rapidly grown its equities trading market share, jumping from fifth position in 2009 to second in the first quarter of 2011, behind traditional market leader UBS.
Mr Roberts said while market conditions would remain volatile he was confident the Citi business would improve on its 2010 performance, especially as M&A started to return among Australian corporates.
'You have to bear in mind the market is still a very skittish place -- people are holding back,' Mr Roberts said.
'As the US rebounds, confidence will come back, albeit with significant volatility as the result of political and economic events around the world.
'There's no question the pipeline is still strong, everybody will tell you that, but it's a question of what is going to close.
'That's driven by a more conservative prudent outlook from management and a slightly nervous marketplace."
The retail bank’s profit rose from A$181.6 million in 2009 to A$261m, helped by a 35 percent increase in retail deposits and a fast growing credit card business.
Citi's credit cards are threatening to overtake National Australia Bank as the fourth-largest player in the market.
But the increase was offset by a A$126.6m loss in the investment banking business. The plunge into the red was a turnaround from the A$15.3m profit in 2009. Mr Roberts said the loss was driven by volatile equity market conditions in 2010, low trading volumes and a lacklustre corporate advisory market.
Despite the performance, Citi has rapidly grown its equities trading market share, jumping from fifth position in 2009 to second in the first quarter of 2011, behind traditional market leader UBS.
Mr Roberts said while market conditions would remain volatile he was confident the Citi business would improve on its 2010 performance, especially as M&A started to return among Australian corporates.
'You have to bear in mind the market is still a very skittish place -- people are holding back,' Mr Roberts said.
'As the US rebounds, confidence will come back, albeit with significant volatility as the result of political and economic events around the world.
'There's no question the pipeline is still strong, everybody will tell you that, but it's a question of what is going to close.
'That's driven by a more conservative prudent outlook from management and a slightly nervous marketplace."
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