Citigroup’s Investment Banking Revenues Trail Competitors

Though Citigroup Inc.’s investment banking business is trailing that of its peers, there’s no cause for concern, according to Bram Berkowitz of The Motley Fool.

Following a blockbuster performance in 2021, revenue has dropped year-over-year, as it has for the bank’s competitors. But the drop has been greater at Citi.

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Berkowitz has theories as to why. First, volatile market conditions have affected M&A, equity underwriting, and debt underwriting. While Citi’s M&A decrease was the smallest among its peers, combined equity and debt underwriting decreases were the greatest, according to bank statements Berkowitz cited.

Second, the total amount of investment banking fees has dwindled, falling from $123 billion in 2021 to a projected $69 billion for 2022.

Because investment banking revenues can be hard to predict, Berkowitz cautions that there is no need to worry about Citi. It could be more volatile, he said, because its overall investment business is smaller than its peers. The bank has been hiring in the division lately, according to Berkowitz’ reporting.

The lower debt-underwriting activity "is really more of a function of low deal volume pretty much across the board. And there really isn't a whole lot more to it than that," Citigroup's Chief Financial Officer Mark Mason said on an earnings call with analysts, Berkowitz reported.