Citi slumps after warning of costs rising, revenue slipping

Bloomberg

Citigroup Inc shares fell the most in five months after the bank warned expenses would increase sharply as it invests to satisfy a pair of consent orders from regulators.
Expenses in second quarter will likely jump to “somewhere in the middle” of a range of $11.2 billion to $11.6 billion, Chief Financial Officer Mark Mason told investors at a virtual conference. That compares with costs of $10.4 billion a year earlier.
“Last year this time we took expenses down pretty meaningfully,” Mason said. “But we also, as you know, have spent that we’re making in the way of transformation.”
Citigroup slumped as much as 5%, its biggest intraday decline since January 15, making it the worst performer in the 65-company S&P 500 Financials Index. The stock’s gain for the year was pared to just 15%, compared with a 25% advance for the index.
Citigroup has been in the midst of overhauling its underlying technology as well as its risk management and internal controls after it was dinged last year by both the Office of the Comptroller of the Currency and the Federal Reserve for deficiencies. Chief Executive Officer Jane Fraser, who took over in March, has also set about refreshing the lender’s overall strategy.
Mason also warned many of its biggest businesses would suffer from a drop in revenue in the second quarter. Overall trading revenue will likely sink by a percentage in the “low 30s,” he said, adding that strength
in equities would be countered
by weakness in its sprawling fixed-income franchise.
The firm’s US consumer business has also been beset by slowing loan growth as credit-card holders pay back their loans at faster rates. Revenue in the unit is likely to fall by around 15%, Mason said.
The current quarter is “a very different place than we were a year ago,” he said.