Citigroup
shares rose in premarket trading on Friday following the release of better-than-expected second-quarter earnings and revenue.
Despite the beat, Citi’s revenue declined 1% compared to the previous year due to the negative impact of market decline and investment banking businesses on its results. Citi attributed this decline to the uncertain macroenvironment and low volatility, which affected client activity and market performance.
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“Amid a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet,” said CEO Jane Fraser in a statement.
Here’s how the company performed in the quarter compared to analyst expectations:
- Earnings per share: $1.33 vs. $1.30
- Revenue: $19.44 billion vs. $19.29 billion
Citigroup’s net income declined by 6% to $2.9 billion, or $1.33 per share, from $4.5 billion, or $2.19 per share, last year. This decline was primarily due to higher expenses, a high cost of credit, and lower revenue.
“Markets revenues were down from a strong second quarter last year, as clients stood on the sidelines starting in April while the U.S. debt limit played out,” Fraser explained. “In Banking, the long-awaited rebound in Investment Banking has yet to materialize, making for a disappointing quarter.”
On a positive note, revenue from personal banking and wealth management increased by 6% in the quarter to $6.4 billion, driven by strong loan growth.
Citi returned a total of $2 billion to shareholders through common dividends and share buybacks in the second quarter.
Shares of Citigroup rose over 1% in premarket trading. The stock has gained 5.4% year to date, outperforming the SPDR S&P Bank ETF
(KBE), which is down 14.8%.
Read the earnings release here.
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