US bank Citi reports revenue fall after Wall Street’s dreadful December hits fixed income trading

US bank Citi has reported a surprise fall in revenue as Wall Street’s volatile December slashed income on its bond trading division by 21 per cent.

The third-largest US bank said revenues fell two per cent to $17.1bn (£13.3bn) in the three months to December, below expectations of $17.6bn.

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“A volatile fourth quarter impacted some of our market sensitive businesses, particularly fixed income,” chief executive Michael Corbat said.

Last month Wall Street suffered its worst December since 1931, with the S&P 500 down nine per cent and the Dow Jones 8.7 per cent, capping off the worst year for stocks since 2008.

The bank’s fixed income trading division, which handles bonds, currencies and commodities, saw revenue decrease by 21 per cent to $1.9bn.

Citigroup said the sharp fall “reflected a challenging trading environment characterised by volatile market conditions and widening credit spreads, particularly in December.”

A number of major US banks will reveal with their fourth quarter earnings this week, including Wells Fargo and JP Morgan tomorrow.

Citi’s results could suggest similarly disappointing results ahead as a number of US banks, including Wells Fargo and JP Morgan, prepare reveal fourth quarter earnings later this week.

Despite the fall in revenues, Citi said profits rose to $4.2bn from $3.7bn a year earlier, and at $1.61 per share, beat earnings per share forecasts.

Corbat said the bank made “solid progress” in 2018 and returned more than $18bn of capital to shareholders.

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Wall Street opened lower following Citi’s results, the S&P 500 fell 0.5 per cent, the Dow Jones 0.4 per cent and the Nasdaq slipped 0.7 per cent.

Shares in Citigroup rose 3.3 per cent in early trading.