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Bloomberg
Citigroup Inc said it probably won’t meet a closely watched profitability target this year because market volatility crimped fourth-quarter trading revenue.
Chief Financial Officer John Gerspach said sluggishness in its Group of 10 rates-trading business likely means the bank will post a drop in fixed-income trading revenue for the final three months of the year. The investment-banking franchise also was under pressure from a decline in investment-grade debt underwriting and a slowdown in equity issuance, Gerspach said at a conference sponsored by Goldman Sachs Group Inc.
As a result, Citigroup likely won’t meet its targeted efficiency ratio — a measure of what it costs to produce a dollar of revenue — of roughly 57.3 percent for the year. While the bank had been hoping to shave 100 basis points from that measure this year, it could be closer to a 90 basis-point decline, Gerspach said.
Gerspach said the bank expects to exceed the target for another profitability measure — return on tangible common equity — which should be “approaching 11 percent†this year. That figure is still on track to reach at least 13.5 percent by 2020, he said.