Citigroup’s trading revenues up on ECB’s cheap loans

Thanks to the European Central Bank (ECB)'s cheap loan programme, Citigroup has unveiled a sharp rise in trading revenues as it emerged a major beneficiary of the move.

According to the bank, it benefited from the ECB's loans with investors and traders returning to play the markets.It added, fixed-income trading revenues rose over 100 per cent to $4.74 billion over the first quarter as against the final three months of last year.

Shares in Citigroup rose around 3 per cent in New York, as the sharp improvement in its fixed-income business served to overshadow an overall slip in profit for the quarter.

The bank posted a profit of $2.93 billion, down from $3 billion in the first quarter of 2011, though higher than the profits from the final three months of 2011, a quarter that saw Europe occupied with its debt woes. Analysts say the profit would have been higher had it not been for an accounting adjustment relating to the cost of the bank's debt.

The rebound in Citigroup's trading revenue will strengthen perceptions that the whole of Wall Street benefited from a revival of investor confidence in the quarter, as also signs that the US recovery was gaining momentum.

Analysts expect Goldman Sachs to be the next beneficiary when it reports profits today. However, three weeks into the second quarter of the year there was some scepticism over whether the banks would be able to build on what is also seasonally a strong quarter.