Citigroup Reports Profit, Revenue Boost--2nd Update
July 15 2019 - 9:18AM
Dow Jones News
By Telis Demos
Strong U.S. consumer banking gave Citigroup Inc. a boost in the
second quarter.
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.
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.
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.
Write to Telis Demos at telis.demos@wsj.com
(END) Dow Jones Newswires
July 15, 2019 09:03 ET (13:03 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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