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Citi: new CEO, old earnings story

Tuesday, October 15, 2013 - 01:16

Oct. 15 - Citigroup missed third quarter profit forecasts due to slower bond trading and falling demand for mortgages, a year after CEO Michael Corbat took control. Fred Katayama reports.

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A slowdown in its mortgage and bond trading businesses slammed Citigroup, making it the first U.S. bank to disappoint Wall Street on both earnings and revenues in the third quarter. Fixed income revenues fell 26 percent. Bond trading slowed after the Federal Reserve decided to keep up its massive purchases of bonds. Citi's CFO blamed the decline on market conditions and defended its fixed income unit as "appropriately sized." Like Wells Fargo and J.P. Morgan, the sudden rise in interest rates slammed the brakes on the refinancing wave, causing a slowdown in Citi's mortgage originations. That helped cut consumer banking revenue by more than half a billion dollars. Weakness in international markets also hurt its Citicorp unit with double digit income declines in Europe, Latin America and Asia. With third quarter net income of $3.2 billion, CEO Michael Corbat probably won't be popping any champagne corks on his first anniversary at the helm. He said, "While many of the factors which influence our revenues are not within our full control, we certainly can control our costs." Citi's stock fell at the market open. Its shares had been up 25 percent this year in line with other bank stocks.

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Citi: new CEO, old earnings story

Tuesday, October 15, 2013 - 01:16