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Citi Expects Investment Banking to Grow in Emerging Markets

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After reporting 20% year-over-year rise in investment banking revenues in 2017, Citigroup (C - Free Report) , expects further growth in this segment in 2018 on the back of improved activity in the emerging markets.

In an interview with Reuters, Miguel Azevedo, head of investment banking in the Middle East and Africa said that bond sales, M&As and trading activities are likely to take an upswing in Nigeria, Egypt and the United Arab Emirates, in turn spurring the bank’s investment banking revenues.

Per growth projections made by the World Bank for 2018, the Middle East and North African regions are expected to witness a 3% growth rate. Improved condition of oil prices and expectations of development in economic reforms have made the region an attractive opportunity for the private banks to tap on.

Notably, the region is undergoing a turnaround from traditional IPOs or debt rising toward private M&A deals and placements, which guarantees strong investment banking performance. This has increased competition among the several lenders present there.     

In April 2017, Citigroup was granted the license to provide services like investment banking, debt and equity capital markets, securities and research capabilities to local and institutional clients in Saudi Arabia. Last month, the bank held its first board meeting in the country marking its return after 13 years of absence.

Citigroup has been building upon its Saudi investment banking business with new hires.

Also, Azevedo reflected views on growing opportunities in Nigeria, as the country is likely to return to the bond markets in 2018. In November 2017, a $3 billion two-part international bond issue was managed by Citigroup and Standard Chartered. He also added Egypt to the list on account of increase in number of IPOs.

Citigroup, with its global footprint and attractive core business, seems to be well poised for growth. Also, improving domestic economy amid the rising rate environment, as well as anticipated potential ease of regulations under President Trump’s administration, the bank is likely to continue delivering strong results in quarters ahead.

Shares of Citigroup have gained 30.9% over the past year, outperforming 20.2% rally for the industry it belongs to.

The stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other stocks worth considering in the same space are Bank of America Corporation (BAC - Free Report) , State Street Corporation (STT - Free Report) and KeyCorp (KEY - Free Report) . All these stocks carry a Zacks Rank of 2.

The Zacks Consensus Estimate for Bank of America has increased 8.8% for the current year, in the last 30 days. The company’s share price has increased 37.8% in the past year.

State Street has witnessed 4.6% upward earnings estimate revision for 2018, in the last 30 days. Its share price has risen 33.8% in the past year.

KeyCorp’s shares have gained 18.5% in a year and its earnings estimates for 2018 have moved up 5% in the last 30 days.

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