Citi shares fall as investor worry over expenses overshadows second-quarter profit beat

Citigroup beat Wall Street estimates as it reported surging trading revenues, but its stock slid as investors worried about potentially worse results in the second half due to a rise in expenses.

Citi shares were down 4.2% in early afternoon, even after the bank reported the highest quarterly revenue in a decade and sharp growth in net income.

The bank's stock had been outperforming peers and reducing its valuation gap as investors saw progress in a sweeping restructuring devised and executed by CEO Jane Fraser. The bank had been reaping results after years of divestitures of its international consumer units, organizational simplification and work on consent orders that punished the bank in 2020 for lack of controls and risk management.

The bank had a 13% return on common tangible equity in the second quarter, a level that Citi was only expecting to reach in 2027 or 2028. But after the bank said it was keeping its 10% to 11% target for this year, investors were confused.