Citi Shares Higher Despite Another Fine

Shares in US banking firm Citibank are trading over 3% higher pre-market on Tuesday. Shares in Citi  were broadly higher over the last five trading days. This is despite recent headlines regarding a scandal involving Citibank affiliates.

Citibank Settles Over Charges

The US Commodity Futures Trading Commission announced that it has filed and settled with Citibank N.A, Citigroup Energy Inc, and Citigroup Global Markets Inc over failure to diligently supervise their audio preservation system.

The CFTC maintains that it was an audio preservation system operated by Citibank on behalf of the three affiliates. The system was designed to ensure that the audio recordings complied with CFTC regulations.

However, due to a fault in the design, the system erased millions of audio files including those under a CFTC subpoena. Citibank had assured the Division of Enforcement that they were safely preserved.

Latest in a Series of Fines

Citi agreed to pay out $4.5 million in a civil monetary penalty. This is the latest in a series of charges applied against the bank for malpractice.

In November last year, due to “serious” reporting failures, Citi was fined a record £44 million by the Prudential Regulation Authority. The PRA maintained that the US bank’s failure to comply with reporting standards was “serious and widespread in nature” during the years 2014-2018.

The PRA said that the bank’s systems were inadequate and Citi didn’t have enough staff working on regulatory accuracy.

Q2 Earnings Beat

Despite Citi reporting better than expected Q2 earnings, shares in Citi have been heavily sold over recent weeks. Citi reported a Q2 EPS of $0.50, beating estimates of a $0.36 reading. Furthermore, the bank posted Q2 revenues of $19.77 billion versus estimates of a $19.12 reading.

Big Jump in Trading Revenues

The main driver behind the bank’s rise in revenues was a 68% jump in its fixed-income trading revenues along with a 48% jump in its markets and securities services revenues.

Commenting on the results, Citi CEO Michael Corbat said:

“While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well. The Institutional Clients Group had an exceptional quarter, marked by an increase in Fixed Income of 68%.”

Shares in Citi have fallen strongly since we last reported. The group’s stock price has now broken well below the 48.24 level. This comes after price previously broke below the rising channel low. Price is now on its way to testing the next key support level at 39.63. This is ahead of the 2020 lows down at 32.05.