Citigroup's quarterly profit gets boost from trading

By By David Henry and Sweta Singh Markets Reuters

Citigroup Inc reported a 7 percent rise in quarterly profit, wrapping up a strong quarter for big U.S. banks, as trading in bonds and currencies surged following Donald Trump's surprise victory in November.

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"We had a strong finish to 2016, bringing momentum into this year," Chief Executive Michael Corbat said in a statement. "We drove revenue growth in our businesses and demonstrated strong expense discipline across the firm."

Citi's net income rose to $3.57 billion, or $1.14 per share, in the quarter ended Dec. 31, from $3.34 billion, or $1.02 per share, a year earlier, topping the average analyst estimate of $1.12 per share, according to Thomson Reuters I/B/E/S.

Citigroup's revenue from fixed-income trading rose about 36 percent, while equity trading revenue rose about 15 percent, pushing up total markets and securities services revenue by about 24 percent compared with the same quarter last year.

However, adjusted revenue fell 9 percent to $17.01 billion due to divestitures and missed the average estimate of $17.30 billion.

Citigroup's shares were little changed in premarket trading, having risen about 17 percent since the election.

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In the wake of the U.S. presidential election, Wall Street trading desks benefited from higher volume and volatility in stocks, bonds and currencies.

Goldman Sachs Group Inc reported a jump of about 78 percent in revenue from trading fixed-income securities, currencies and commodities earlier on Wednesday.

JPMorgan Chase & Co , the No. 1 U.S. bank by assets, and Morgan Stanley also reported sharp increases in fourth-quarter fixed-income trading revenue.

Adjusted revenue from Citicorp, Citigroup's ongoing businesses, rose 6 percent to $16.36 billion. Citicorp's expenses fell 2 percent to $9.46 billion.

Shares of U.S. banks have staged a dramatic rally following Trump's victory as investors expect banks to reap huge benefits from lighter regulation under his presidency. Still, bank shares fell on Tuesday as concerns about protectionist trade policies planned by U.S. President-elect Trump weighed on the wider market.

The Federal Reserve, which raised interest rates by 0.25 percentage points in December, is expected to raise them again three times this year. That should help banks.

Citigroup said adjusted return on tangible common equity, a key measure of profitability, was unchanged at 7.1 percent.

Corbat set a target of reaching a 10 percent return on equity by 2015 shortly after taking the reins in 2012.

Total operating expenses fell 9 percent to $10.12 billion.

Citigroup has more assets in emerging markets than other U.S. banks. Since the financial crisis, it has been exiting less profitable operations in markets around the world, as it works to return capital to investors.

The bank said it returned nearly $11 billion in capital to shareholders last year.

(Reporting by Sweta Singh in Bengaluru and David Henry in New York; Editing by Michael Erman and Nick Zieminski)