Citigroup earnings miss estimates on bond trading, mortgages

Rates, Currencies

The biggest declines came from interest rates and currencies, Chief Financial Officer John Gerspach, 60, said on a conference call with journalists. JPMorgan Chase & Co., the biggest U.S. bank, last week reported an 8% decline in bond trading revenue, to $3.44 billion.

Citigroup’s fixed-income sales and trading division is led by executives including Carey Lathrop, who oversees credit, Andy Morton who manages interest rates and Howard Marsh, head of municipal bonds. Jeffrey Perlowitz and Mark Tsesarsky are co- heads for securitized products, and Anil Prasad runs the currency business.

Revenue from stock trading, a unit run from London by Derek Bandeen, increased 36% from a year earlier to $710 million. Orenbuch estimated $801 million, while Cassidy predicted $848 million.

Fees from investment banking, which includes managing bond and share sales for clients and providing advice on mergers and acquisitions, fell 10% to $839 million. The figure compares with $767 million estimated by Orenbuch and $926 million by Cassidy. Raymond J. McGuire and Tyler Dickson oversee the unit from New York.

Consumer Banking

Profit at Citigroup’s consumer-banking unit, run by Citigroup co-President Manuel Medina-Mora, fell 23% to $1.62 billion. The unit operates about 4,000 branches across almost 40 countries. U.S. mortgage originations fell to $14.5 billion, the lowest in a year, according to a supplement provided by the bank.

Mortgage refinancings slumped after rates on 30-year loans jumped from historical lows of less than 3.5% earlier this year to an average of 4.32% at the end of September, data compiled by Freddie Mac show. Applications for refinancings, which accounted for 82% of all requests for home loans last year, made up 63% in the third quarter, according to data compiled by the Mortgage Bankers Association.

The bank released $675 million in loan-loss reserves.

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