Citigroup Reports Profit: Net Income Rises 7%

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Citigroup said Monday its second-quarter net income rose 7% from a year ago. Quarterly profit was $4.8 billion, up from $4.5 billion. Per-share earnings were $1.95. Analysts had expected $1.81 a share. Revenue at the bank was $18.76 billion, up 2% from $18.47 billion a year ago. Analysts polled by Refintiv had expected $18.5 billion.

Citigroup is the first of the big U.S. banks to report second-quarter results. The New York bank and its rivals have been under pressure in recent months. Tepid market volatility is hurting trading desks. The Federal Reserve has signaled it is ready to cut interest rates, which would likely hurt banks’ lending profitability.

Trading revenue at Citigroup was up 4% to $4.1 billion, but that included a one-time gain on the bank’s stake in a trading platform. Without that gain, Citigroup’s core trading revenue declined 5% from a year ago.

INSIGHTS ›

On that basis, it would be the third straight quarter of declines in the trading unit. Banks have warned that despite record stock markets, clients have remained cautious, and weren’t paying their banks to help them put on big new bets.

The one-time gain in trading also flattered the bank’s earnings per share. Without it, the bank would have earned $1.83 per share.

Overall corporate and institutional banking revenue at Citigroup was flat for the quarter, at $9.72 billion. Investment banking revenue fell 10%, driven by a 36% drop in fee revenue from advising companies on mergers and acquisitions.


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But the bank generated solid growth from its consumer unit. Global consumer banking revenue at Citigroup was up 3% to $8.51 billion.

The bank’s U.S. retail presence lags behind peers in many respects, but Citigroup has been investing heavily to expand it, particularly through digital and mobile banking.

Revenue for U.S. consumer banking was up 3% to $5.16 billion, driven by a big pickup in Citigroup’s branded cards, where revenue grew 7% to $2.2 billion. The bank has been letting many of its promotional zero-interest-borrowing card offers lapse, leading to a revenue pickup.

Citigroup is trying to meet 2020 financial targets closely watched by investors, which makes this year’s results crucial. For the quarter, Citigroup produced a return on tangible common equity of 11.9%. The bank is aiming for a return of 12% this year.

In June, Citigroup won approval from the Federal Reserve to pay out another $21.5 billion to investors in dividends and buybacks in the next 12 months.

The bank continued to slash costs. Expenses fell 2% to $10.5 billion. Chief Executive Michael Corbat predicted investments in technology could improve efficiency by about $500 million a year.

Citigroup shares have led major banks with a 38% gain so far in 2019. The broader KBW Nasdaq Bank index is up 16% this year.



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