Citigroup Inc on Monday reported quarterly profit that missed analysts' estimates, as fixed-income trading revenue plunged and higher US bankruptcies hurt credit card revenue, sending its shares down 2 percent.
Citigroup, the world's largest financial services company, saw a decline in second-quarter profit from the trading of debt and derivatives as the gap between short- and long-term interest rates shrank.
Chief Executive Charles Prince called the environment "one of the worst we have seen in years."
Citigroup also saw its North American credit card revenue fall 3 percent as more US customers filed for bankruptcy protection ahead of changes in US bankruptcy laws.
Citigroup's net income for the second quarter more than quadrupled to $5.07 billion, or 97 cents per share, from $1.14 billion, or 22 cents. Analysts polled by Reuters Estimates on average had forecast $1.01 per share.
Revenue fell 3 percent to $20.2 billion, compared with analysts' average estimate of $21.08 billion.
The 2004 quarter included a charge for legal costs related to WorldCom Inc, Enron Corp and other corporate scandals, and a gain from the sale of a stake in a Saudi Arabia bank. Excluding these items, profit fell 5 percent.
Asked on a conference call if Citigroup can in 2005 regain positive operating leverage, where revenue rises faster than costs, Prince said, "I still feel that is a goal that we can reach."
Capital markets and banking profit fell 31 percent to $1.04 billion. Fixed-income revenue declined 28 percent, including trading declines of 55 percent in interest-rate products and 57 percent in credit products. Investment banking revenue fell 1 percent, hurt by lower underwriting fees from junk bonds.
Consumer banking profit fell 7 percent to $2.9 billion, but rose 6 percent excluding the Saudi bank sale. Profit increased 4 percent in retail banking, 5 percent in cards and 9 percent in consumer finance.
Corporate and investment banking posted a profit of $1.37 billion. Profit from alternative investments rose 38 percent to $385 million, while wealth management profit fell 11 percent to $322 million.
Assets rose 11 percent to $1.55 trillion.