The largest financial services firm in the U.S. had a sharp increase in its investment banking business, where net income rose 31% to $1.4 billion. This was in part due to rising equity markets and, it is assumed, an improving economy.
Although the numbers give reason to have hope for better times ahead for Citigroup, and many big problems are indeed behind it, there's still reason to remain cautious.
The company's mergers and acquisitions division actually saw revenue decline 30%, marking an even more dismal low than the 2002 nadir. Meanwhile, the company's jump in total revenue is coming on the heels of very depressed 2002 results. Remember, this quarter we're comparing results to the quarter that last year marked the bear market's low.
That said, a stock market typically rises on earnings growth, and growth is occurring. But growing in 2003 is relatively easy when you're comparing to 2002. Now that we've seen double-digit earnings gains from many market leaders this year -- including Citigroup -- 2004 will be the real test of whether this rebound is for real.
The country's second-largest bank firm, J.P. Morgan