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Citigroup (C) 2Q 2022 earnings beats

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Jane Fraser, CEO of Citi, says she is convinced Europe will fall into recession because it faces the impact of the war in Ukraine and the resultant energy crisis.

Patrick T. Fallon | AFP | Getty Images

Citigroup on Friday posted second-quarter results that beat analysts’ expectations for profit and revenue because the firm benefited from rising rates of interest and powerful trading results.

Here’s what the bank reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.19 vs $1.68 expected
  • Revenue: $19.64 billion vs $18.22 billion expected

Shares of the corporate rose 8% in early Latest York trading.

Profit declined 27% to $4.55 billion, or $2.19 per share, from $6.19 billion, or $2.85, a 12 months earlier, the Latest York-based bank said in a statement, because it put aside funds for anticipated loan losses. But earnings handily exceeded expectations for the quarter as analysts have been slashing estimates for the industry in recent weeks.

Revenue rose a bigger-than-expected 11% within the quarter to $19.64 billion, greater than $1 billion over estimates, because the bank reaped more interest income and saw strong leads to its trading division and institutional services business. Net interest income jumped 14% to $11.96 billion, topping the $11.21 billion estimate of analysts surveyed by Street Account.

Of the 4 major banks to report second-quarter results this week, only Citigroup topped expectations for revenue.

“In a difficult macro and geopolitical environment, our team delivered solid results and we’re in a robust position to weather uncertain times, given our liquidity, credit quality and reserve levels,” Citigroup CEO Jane Fraser said in the discharge.

Corporate money management, Wall Street trading and consumer bank cards performed well within the quarter, she noted.

The firm’s institutional clients group posted a 20% jump in revenue to $11.4 billion, roughly $1.1 billion greater than analysts had expected, driven by strong trading results and growth within the bank’s corporate money management business. Treasury and trade solutions generated a 33% increase in revenue to $3 billion.

Fixed income trading revenue surged 31% to $4.1 billion, edging out the $4.06 billion estimate, due to strong activity on rates, currencies and commodities desks, Citigroup said. Equities trading revenue rose 8% to $1.2 billion, just below the $1.31 billion estimate.

Much like peers, investment banking revenue dropped a steep 46% to $805 million, missing the $922.8 million estimate.

Bank stocks have been hammered this 12 months over concerns that the U.S. is facing a recession, which might result in a surge in loan losses. Like the remainder of the industry, Citigroup can be contending with a pointy decline in investment banking revenue, offset by the boost to trading leads to the quarter.

Despite Friday’s stock gain, Citigroup stays the most cost effective of the six biggest U.S. banks from a valuation perspective. The stock was down 27% in 2022, as of Thursday’s close, when its shares hit a 52-week low.

To assist turn across the firm, Fraser has announced plans to exit retail banking markets outside the U.S. and set medium-term return targets in March.

Earlier Friday, Wells Fargo posted mixed results because the bank put aside funds for bad loans and was stung by declines in its equity holdings.

On Thursday, larger rival JPMorgan Chase posted results that missed expectations because it built reserves for bad loans, and Morgan Stanley disenchanted on a worse-than-expected slowdown in investment banking fees.

Bank of America and Goldman Sachs are scheduled to report results Monday.

Correction: Net interest income jumped 14% to $11.96 billion. An earlier version misstated the proportion.

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