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

TRADING REVENUE and investment-banking revenue are expected to drop at Citigroup Inc. as a result of market volatility due, in part, to U.S.-China trade tensions, Argentine politics and the U.K.'s planned exit from the European Union. / BLOOMBERG FILE PHOTO/MARK KAUZLARICH

NEW YORK – 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 Monday. At rival Bank of America, deal-making fees will probably rise by a low-single-digit percentage, Chief Operating Officer Tom Montag said at the same conference.

Trade tensions between the United States and China, Argentine politics and the United Kingdom’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.

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Citigroup’s stock advanced Monday, 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% to $69.79, compared with the 3.6% advance of the 24-company KBW Bank Index. Bank of America shares climbed 3.3%.

Citigroup now expects net interest revenue to increase between 3% and 4% this year, compared with an earlier expectation of 4%, as more interest-rate cuts from the Federal Reserve loom. Mason said the bank still believes it can achieve a 12% 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%, I think we’ll get pretty darn close,” Mason said. “But that does remain the target.”

Jenny Surane and Lananh Nguyen are reporters for Bloomberg News.

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