Citi's investment bank looks a bit feeble compared to JPMorgan's
It's not just JPMorgan that released its first quarter results today. Citi did too. The investment banking operations of the two firms performed rather differently.
The chart below shows the year-on-year performance by business for the two banks in the first quarter of 2023 versus the first quarter of 2022.
With the exception of debt capital markets (DCM) and fixed income currencies and commodities (FICC) and sales and trading, where Citi did better, JPMorgan outperformed in every category. JPMorgan saw stronger revenue growth than Citi in equities sales and trading, stronger growth in equity capital markets (ECM) and stronger growth in M&A advisory.
Citi's equities salespeople and traders and ECM bankers did particularly badly in revenue terms year-on-year compared to JPMorgan's. Citi had some senior exits from its electronic equities business last year, but the bank today blamed the decline on "macro headwinds" and said that revenues declined in both cash equities and equity derivatives compared to a 'very strong quarter last year.'
Citi's comparative success in FICC sales and trading reflected strength in macro (rates and FX), where its revenues rose 13% year-on-year, compared to a 24% decline in credit trading revenues. However, Citi's credit traders didn't do that badly over a shorter time scale: they nearly doubled their revenues compared to the end of last year. JPM doesn't split its FICC revenues into credit and macro.
Citi continued to add investment bankers (including from Credit Suisse) in the first quarter. The bank said today that it had been hiring. However, the real recruitment has taken place across Citi's technology team: with technology spending across the bank up 12% year-on-year in the first quarter, the bank said today that it had added no fewer than 8,000 technology staff in the past 12 months.
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