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Citigroup Earnings Shows Decline in Fixed-Income Revenue

This article was originally published on ETFTrends.com.

Citigroup posted mixed results on its second quarter earnings report Friday as the bank outperformed in earnings per share, but underperformed on revenue, including a decline in fixed-income.

Forecasts for Citigroup earnings were slated at $1.56 per share, and the bank surpassed that, posting a $1.63 EPS figure. In addition, Citigroup netted $4.49 billion in income, besting last year's second quarter results of $3.9 billion in net income.

Where Citigroup fell flat was in revenue--Wall Street estimates were pegged at $18.512 billion, but could only muster $18.469 billion. As of 12:30 p.m., the stock was down 2%.

One of the reasons for the underperformance in revenue was in its trading operations. Citigroup pointed to a challenging market environment, particularly in the fixed-income space where revenue fell by 6% to $3.1 billion.

“The biggest decline in our fixed-income revenues year-over-year was really in spread products, and that was really concentrated in securitized markets,” Chief Financial Officer John Gerspach said during a conference call. The company had expected “equities would be a stronger performer and we’d see some challenges in fixed income given the overall market conditions and that’s exactly what played out.”

On the flip side, revenue from the Citigroup's treasury and trade solutions were up $2.34 billion in the second quarter--an 11% increase from the previous year--a remarkable figure given that tariff wars between the United States China made for a challenging trading environment.

Fixed-Income ETFs Post Gains

In contrast to Citigroup's fixed-income revenue numbers, a pair of fixed-income ETFs were able to shrug off the news of the bank's decline in revenue as  iShares iBoxx $ Invmt Grade Corp Bd ETF (LQD) and iShares iBoxx $ High Yield Corp Bd ETF (HYG) were up on the day--both LQD and HYG up 0.11% as of 12:30 p.m. Eastern Time.

Related: Dow Up Slightly as Markets Digest Banks Earnings 

LQD tracks the Markit iBoxx USD Liquid Investment Grade Index composed of primarily investment-grade corporate bonds and is up 3% the last three years according to Yahoo! Finance performance figures. HYG tracks the Markit iBoxx® USD Liquid High Yield Index that utilizes a rules-based index of liquid, U.S. dollar-denominated, high yield corporate bonds and it's up 3.95% the past three years.

For more trends in fixed income, visit the Fixed Income Channel.

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