Dallas, Texas 05/06/2014 (FINANCIALSTRENDS) – Citigroup Inc (NYSE:C) yesterday reported that its revenue from commodities transaction during 1Q14 nearly doubled as compared to 1Q13. This makes Citigroup as the latest bank to get benefitted from soaring power and gas prices in post- winter season. The bank reported to have brought in $224 million in revenue in principal transactions involving commodity and other contracts. This represents almost 90% growth as compared to 1Q13.
Following this update, Citigroup now joins a list of companies including BP plc (ADR) (NYSE:BP) and major banks like Goldman Sachs Group Inc. (NYSE:GS), Macquarie Bank and Morgan Stanley (NYSE:MS) all of which reported better earnings from energy trading arms in 1Q14.
The gain from commodity trading is also attributed to the dramatic shift which triggered competition between new and existing players for market share as some of the world’s largest banks shutdown trading desks or exits the commodity trading business following the stringent regulatory scrutiny and weakened margins.
The gains mark a considerable turnaround for Citigroup Inc (NYSE:C) as it is reestablishing its commodities trading operations with major focus on gas and power, following a government bailout during the economic crisis. However, it could not be confirmed that how much of the 1Q14 revenue surge was due to those expansion efforts. However, as far as commodity revenue is concerned, Citigroup is doing well with reported transaction revenues of $267 million in 2013, significantly higher from $92 million in 2012 and $76 million in 2011.
Citigroup Inc (NYSE:C)’s Value at Risk (risk exposure to commodities) also increased to $14 million in 1Q14 from $11 million in 4Q13 and is reported to be the highest since 1Q13.
The stock shed 1.15% on Monday and closed at $47.18, almost 5.70% below its 200 day simple moving average. The stock has shed almost 9.13% year to date and have traded flat over last 12 month period with marginal 0.45% gains.