Citi Reports That It’s Still Way Too Big To Worry About A Massive Trading Loss

Mike Corbat: “I got creamed by that December volatility…come at me, bro.”
Publish date:

It’s earnings season, baby! And with all the big banks reporting this week, the markets are chugging Pepto and hoping that they remembered to price-in the December volatility shitshow.

The first major lender to see how well-prepared we are for the inevitable disappointment that will be Q4 of 2018 is Citi, because what bank is a better barometer of normal behavior than the opaquely enormous financial services company run by a man so vanilla and forgettable that we’re pretty sure he paid a witch to make him that way so he may one day rule us all?

So, how did Citi do?

Citigroup Inc reported a surprise drop in quarterly revenue on Monday, as extreme volatility in financial markets toward the end of the year hurt its fixed-income trading business.
Revenue from that business fell 21 percent in the fourth quarter, with Citigroup citing widening credit spreads and the market correction in December.

Ruh roh. That’s a lot of money to lose. How does a bank come back from that?…

Excluding a one-time tax related gain, quarterly profit rose to $4.2 billion, or $1.61 a share, in the quarter ended Dec. 31, from $3.7 billion, or $1.28 a share, a year earlier.
Analysts had expected a profit of $1.55 per share, according to IBES data from Refinitiv.

Oh, right…Citi remains so comically massive that it can weather a critical loss in revenue by simply cutting back on a few items and also doing, like, one other thing…

Citigroup’s costs fell 4 percent, with the bulk of the declines coming from a unit that is still shedding assets left over from the 2007-2009 financial crisis.
Earnings per share were also boosted by an 8 percent decline in outstanding stock as Citigroup bought back 74 million of its own shares.

Here’s what Citi looks like at 11:30am EST

Screen Shot 2019-01-14 at 11.29.38 AM

So, if Citi is a [mutant giant] canary in the Q4 coal mine, we can assess that December fucked everybody up, but not too badly if you’re a multi-billion megabank that can use tax cuts to buy back your own shares whilst finally getting around to getting smaller more than a decade after the financial crisis.

You in trouble, Goldman Sachs.

Citigroup reports surprise drop in quarterly revenue, shares fall [Reuters]