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Citigroup Posts Better-Than-Expected Profit on Fixed-Income Uptick

Citigroup posts better-than-expected fourth-quarter earnings amid a strong uptick in profits from its fixed-income trading group.

Citigroup  (C) - Get Report posted better-than-expected fourth-quarter earnings on Tuesday amid a strong uptick in profits from its fixed-income trading group.

The New York-based bank said it earned $4.98 billion, or $1.90 a share, in the fourth quarter, up from $4.31 billion, or $1.61 a share, in the comparable year-ago period. Analysts polled by FactSet had been expecting per-share earnings of $1.81 a share.

Revenue rose 7% to $18.38 billion, up from $17.12 billion a year ago and well ahead of analysts’ forecasts of $17.89 billion.

Some $9.4 billion of that revenue came from the company's institutional client group, "reflecting strong performance in fixed income markets and investment banking," among other factors, the bank said. 

Specifically in fixed income, the bank posted revenue of $2.9 billion, a 49% increase "largely reflecting a recovery from the prior-year period in addition to strong performance, particularly in rates and spread products."

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Equity market revenue, meantime, was $516 million, a 23% drop, "reflecting a more challenging environment in derivatives," the bank said.  

Securities services revenue, which includes trading and other types of securities-related services, was $647 million, a drop of 1%, as higher volumes were offset by lower spreads.

On the expense side, Citigroup said operating expenses rang in at $10.5 billion in the fourth quarter, an increase of 6%, reflecting higher compensation and volume-related expenses.

For the full year, Citigroup reported net income of $19.4 billion on revenue of $74.3 billion, compared with net income of $18 billion on revenue of $72.9 billion in 2018.

Shares of Citigroup gained in morning trading on Tuesday following the earnings announcement, with the stock rising 2.1% to $82.32.

Citigroup stock has rallied some 35% since last August, following other big banks that have continued to benefit from the still-strong U.S. economy and most importantly, rate spreads. 

Citigroup Q4 Earnings graphic