Citi warns trading revenue to decline, BofA is ‘doing OK’

Bloomberg

Citigroup Inc trading revenue is set to drop this quarter amid volatility that gripped markets for most of August, while a top Bank of America Corp executive said his traders are “doing OK” in the period.
Investment-banking revenue at Citigroup is also likely to decline from a year earlier, Chief Financial Officer Mark Mason said at an investor conference. At rival Bank of America (BofA), dealmaking fees will probably rise by a low-single-digit percentage, Chief Operating Officer Tom Montag said at the same conference.
Trade tensions between the US and China, Argentine politics and the UK’s planned exit from the European Union propelled market volatility during the quarter.
Bank of America’s fixed-income trading revenue is down “a little bit,” while equities trading has done well this quarter, Montag said, adding that September remains an important month. Mason was less optimistic.
“I’d say that things have improved since the first half, but as I look at fixed-income and equity trading revenues, we’re likely to be slightly down
versus last year given some of the volatility that we’ve seen in the market,” Mason said at the conference, hosted by Barclays Plc.
Citigroup’s stock advanced, with most of the gains coming before Mason began speaking, as the sector benefited from rising Treasury yields.
The company’s shares rose 4.3 percent to $69.79, compared with the 3.6 percent advance of the 24-company KBW Bank Index. Bank of America shares climbed 3.3 percent.
Citigroup now expects net interest revenue to increase between 3 percent and 4 percent this year, compared with an earlier expectation of 4 percent, as more interest-rate cuts from the Federal Reserve loom.
Mason said the bank still believes it can achieve a 12 percent return on tangible common equity for the year, but he said there “certainly is some risk” to that target.
“If we don’t hit the 12 percent, I think we’ll get pretty darn close,” Mason said.