Citi results beat Wall St estimates on investment banking, trading strength

Citigroup beat Wall Street estimates for second-quarter profit after reporting its highest quarterly revenue in a decade on Tuesday, as the bank benefited from robust trading income in a volatile market and strong investment banking fees. The bank posted a 45% jump in net income to $5.8 billion, or $3.15 per share. Analysts on average expected it to report a profit of $2.74 per share, according to data compiled by LSEG. Its revenue was $24.8 billion, up 14% from a year earlier, also above Wall Street expectations. Citi's shares, which are up 20.6% so far this year, have outperformed its Wall Street peers, as its overhaul takes shape. The stock was up 2% in early trading on Tuesday. The cards division's revenue rose by 1% but net income was up 12% to $852 million. Citi's overall net interest income, the difference between what it earns on loans and pays out on deposits, rose 13% in the quarter. Citi has been trying to grow its wealth management business to emulate Wall Street peers that lean on its steadier, fee-based revenue compared with the volatility of trading. The unit raked in $3.18 billion in revenue in the quarter, 13% above a year earlier, thanks to a broad recovery in markets that has pushed up asset values. It posted a 14.4% ROTCE, still substantially lower than peers. The earnings growth comes as the bank vies for stronger profitability in the years to come. CEO Jane Fraser has outlined higher targets as part of a sweeping overhaul she has led to slim down the bank through the sale of consumer businesses while cutting management layers and strengthening risk and control functions. Bank executives are also awaiting a series of regulatory changes favored by the industry, including a proposed overhaul of risk-based capital requirements under the Basel framework. The changes could free up billions of dollars in capital, giving lenders greater flexibility to boost shareholder payouts or invest in growth initiatives. Investment banking revenue jumped 44% in the quarter to $1.55 billion. Total banking revenues rose 34% to $1.92 billion, despite a 4% fall in corporate lending revenue. Citi's revenue in equities and fixed-income markets jumped 45% and 7%, respectively, from a year earlier. Rates and currency trading rose 1%, while other fixed income revenue, which includes commodities, came in 25% higher. "Clients pivoted towards equity and debt capital markets," Chief Financial Officer Gonzalo Luchetti told reporters. He added the bank is also "very disciplined in terms of deploying the balance sheet." Lucchetti said the escalation in the Middle East conflict has yet to hit deal pipelines, but it could have an effect if it extends over time. Trading desks across Wall Street have been reaping bumper revenues from the volatility, which has also extended to a highly lucrative AI-trade that has seen stocks rallying this year.

Citi results beat Wall St estimates on investment banking, trading strength

Citi beats estimates on profit and revenue

Wealth, consumer and overhaul remain in focus

Investment banking and trading drive quarterly strength

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