Citigroup’s (C) revenue from trading equity and fixed-income is expected to fall 15% year-over-year in the first quarter of 2016, the company’s CFO John Gerspach said. Investment banking revenue is also expected to slip 25%, Bloomberg first reported.
Shares fell 3% to about $41.41 a share at 2:40 p.m.
“It has been a tough quarter,” Gerspach said at an investor conference Tuesday, as reported by Reuters.
The financial industry undergone a significant slowdown since the start of the year due to increased market volatility and low commodity prices. For many banks, exposure to the energy sector has also slashed valuations.
Citigroup is no exception.
As one of the big four banks, Citigroup has roughly given $20.5 in loans to companies exposed to the energy sector. That’s roughly 3.3% of the bank’s total loans. Gerspach stated that the company has not changed it’s outlook for the cost of energy loans, with 4.5% of its value in exposure going to reserves.
Those factors, combined with low interest rates have kept customers away from their investment banking business.
Citigroup isn’t the first investment bank to report a potentially weak first quarter. JPMorgan (JPM) also cited weaknesses from the energy sector creating losses in loans.
The company also plans to spend $400 million in the first quarter for changes in infrastructure and capacity due to the tough economic environment.
