It's bank earnings season! Citigroup has also reported its first quarter results today and they're pretty fancy - at least, if you work in fixed income currencies and commodities (FICC) trading at the U.S. bank.
None of the banks to report so far (Goldman, JPMorgan, Citi) had a great first quarter in FICC trading. Citi, however, had a better quarter than the rest.
As the chart below shows, Citi's FICC revenues rose very slightly in the first quarter of 2018 versus the first quarter of 2019, while those at JPMorgan fell 18% and 11% respectively. As a result, Citi's FICC revenue business is now 93% the size of JPMorgan's, whereas last year, it was just 75% of JPM's business. Catching up.
Citi's strength, as ever, is its corporate client base. While JPMorgan complained of, "lower activity, particularly in rates and in current fees and emerging markets" in the first quarter, and Goldman Sachs said revenues were lower in "interest rate products, currencies and credit products," Citi said today that first quarter rates and spread products (ie. credit trading) were strong and that only FX let it down. Moreover, while Goldman spoke of a "muted" start and lower client activity, Citi said corporate client activity was "stable."
We've been here before. When Goldman first unveiled its plan to chase corporate client revenues in 2017, it reflected that corporate clients do business in most conditions - and not just when the volatility is right. Goldman's been chasing corporate clients ever since. Citi, however, has plenty of them already, with the result that its fixed income business is not only one of the biggest, but also one of the most solid. And with banks are keen to cut costs as revenues fall, this would seem to make Citi's fixed income jobs slightly more appealing than the rest.
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