Citigroup CEO Jane Fraser says the year is off to a “better than expected start.”
Kyle Grillot/Bloomberg
Citigroup posted stronger-than-expected first-quarter earnings Thursday and announced plans to exit retail banking in 13 markets.
Citigroup (ticker: C) earned $3.62 per share on revenue of $19.3 billion in the first quarter, topping analyst forecasts of per-share earnings of $2.60 on $18.8 billion of revenue.
Net income was $7.9 billion, up from $2.5 billion in the year-ago quarter, when the bank braced for potential pandemic-related loan losses. Citigroup released $3.8 billion of reserves this quarter, helping results. At this time last year, the bank added $4.9 billion to its allowance for credit losses.
Citigroup shares were down 1.4% in recent trading, at $71.92, after climbing as much as 3% premarket. The KBW Bank Index was down 2.3%, while the S&P 500 and Dow Jones Industrial Average were up 0.9% and 0.8%, respectively.
“It’s been a better than expected start to the year, and we are optimistic about the macro environment,” Jane Fraser, newly appointed CEO of the bank, said in a statement.
Citigroup is in the midst of a transformation plan as it works to improve its internal controls after being slapped with a consent order by regulators late last year. A lot of hopes have been pinned on Fraser, who assumed the top spot at the bank on March 1. While analysts want to see Citigroup thoughtfully right its issues, they’re also hoping for quick action from Fraser.
Operating expenses at the bank were $11.1 billion, higher than the year-ago quarter but slightly lower than forecasts as the bank spends to improve its infrastructure.
Citigroup’s global consumer bank saw a 14% drop in revenue from the year-ago quarter, reflecting the impact of lower card volumes and lower interest rates. Revenue in the bank’s institutional client group slid 2%, but Citigroup saw a 46% increase in investment banking activity, thanks to the surge in special purpose acquisition companies.
In conjunction with its earnings release, Citigroup said it plans to exit its retail-banking operations in 13 overseas markets and will focus its business in four wealth centers: Singapore, Hong Kong, the United Arab Emirates, and London, where it sees greater growth potential.
“While the other 13 markets have excellent businesses, we don’t have the scale we need to compete. We believe our capital, investment dollars and other resources are better deployed against higher returning opportunities in wealth management and our institutional businesses in Asia,” Fraser said.
Bank of America (BAC) posted results earlier Thursday, while Morgan Stanley (MS) posts on Friday. JPMorgan Chase (JPM), Goldman Sachs Group (GS), and Wells Fargo (WFC) reported on Wednesday.
Write to Carleton English at [email protected]
