Citigroup has posted weaker than-expected third-quarter earnings as weak bond market trading volume hurt revenue at the third-largest US bank and across Wall Street.

Citigroup’s bond trading revenue dropped 26 per cent, or $956 million, contributing to earnings that missed forecasts.

While the drop in fixed-income revenue was more severe than at larger rival JPMorgan Chase & Co, it could spell trouble for Goldman Sachs and Morgan Stanley, which post results later this week.

Investors pointed to Citi’s efforts to control costs in the third quarter as the most positive part of the earnings, which were also marked by top-line weakness in retail banking. Similar moves could be imminent at other banks, especially as Wall Street bonus season – typically a huge part of their budgets – approaches. – (Reuters)