Citigroup (C) posted better-than-expected second quarter earnings Friday, bucking the trend of disappointing bank profit reports and sending its shares firmly higher in pre-market trading.
Citigroup said earnings for the three months ending in June were pegged at $2.19 per share, down 16.7% from the same period last year but well ahead of the Street consensus forecast of $1.70 per share. Group revenues, Citigroup said, rose 10.6% to $19.64 billion, coming in well ahead of analysts' estimates of an $18.22 billion tally.
Investment banking revenues were down 46% from last year, the bank said, as new listings and merger deals dried up amid the broader market volatility. Markets revenues, however, were up 25% to $5.3 billion.
Revenues in Treasury and trade solutions, its global business, rose 33%, "driven by 42% growth in net interest income, as well as 17% growth in non-interest revenue, reflecting strong growth with both mid and large corporate clients."
The bank also set aside $375 million to cover potential bad-loan losses, a much smaller figure than that of its rivals Wells Fargo (WFC) and JPMorgan (JPM).
“While the world has changed since our Investor Day in March, our strategy has not and we are executing it with discipline and urgency. Treasury and Trade Solutions fired on all cylinders as clients took advantage of our global network, leading to the best quarter this business has had in a decade," said CEO Jane Fraser. "Trading volatility continued to create strong corporate client activity for us, driving revenue growth of 25% in Markets."
“In a challenging macro and geopolitical environment, our team delivered solid results and we are in a strong position to weather uncertain times, given our liquidity, credit quality and reserve levels," she added. "We intend to generate significant capital for our investors, given our earnings power and the upcoming divestitures."
Citigroup shares were marked 10.12% higher in late morning trrading Friday to change hands at $48.55 each, with the NYSE recording the most intra-day volumes since November of 2020.
Wells Fargo posted weaker-than-expected second quarter earnings Friday and set aside more than half a billion dollars to cover for bad loan losses over the coming months.
Earlier this week, Citigroup's larger rival, JPMorgan, posted a 27% decline in second quarter earnings, with an $8.6 billion tally that missed Street forecasts, and set aside $1.1 billion in reserves to set against bad loans and credit losses, linked in part to the 'deteriorating' economic outlook.
JPMorgan CEO Jamie Dimon said geopolitical tension, high inflation, waning consumer confidence, interest rate uncertainty and the war in Ukraine "are very likely to have negative consequences on the global economy sometime down the road."
