On Tuesday, Citigroup announced a strong performance for the first quarter, exceeding Wall Street’s earnings projections as volatility in the markets enhanced client engagement, benefiting its trading divisions.
As the third-largest bank in the United States, Citigroup’s results mirrored those of its competitors on Wall Street, including JPMorgan Chase, Bank of America, and Morgan Stanley, all of which also reported an uptick in their profits driven by robust trading in equities. However, banking executives caution that current U.S. tariff policies may create uncertainties that impede economic growth.
CEO Jane Fraser emphasized the firm’s commitment to guiding clients through this inconsistent landscape, stating, “When all is said and done, and long-standing trade imbalances and other structural shifts are behind us, the U.S. will still be the world’s leading economy, and the dollar will remain the reserve currency.”
BANK OF AMERICA SEEKS GROWTH FROM TRADING AND INTEREST INCOME
During the first quarter, stock trading saw a notable increase as investors adjusted their portfolios amid heightened anxiety surrounding President Trump’s tariffs and the launch of a low-cost AI model by the Chinese startup DeepSeek.
Citi reported a 12% rise in market revenue, totaling $6 billion, which exceeded prior projections that anticipated only a modest increase. The revenue from equities surged by 23%, reflecting increased client engagement.
In a similar vein, fixed income revenue rose by 8%, amounting to $4.5 billion, primarily driven by advancements in rates and currencies.
Overall, Citigroup’s net income for the quarter jumped 21% to $4.1 billion, translating to $1.96 per share, surpassing analysts’ expectations of $1.85, according to data compiled by LSEG.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| C | CITIGROUP INC. | 64.58 | +1.32 | +2.09% |
| JPM | JPMORGAN CHASE & CO. | 236.79 | +2.12 | +0.90% |
| BAC | BANK OF AMERICA CORP. | 36.67 | +0.72 | +2.00% |
| MS | MORGAN STANLEY | 109.11 | +0.99 | +0.92% |
In premarket trading, Citigroup’s shares edged up 1.4%. However, the stock has experienced a decline of 10.2% since the beginning of the year, closing on Monday at $64.58.
TARIFFS RAISE ECONOMIC CONCERNS
Wall Street’s leaders have voiced apprehension regarding the effects of U.S. tariff policies, indicating that they may cloud the economic landscape and trigger recession concerns. The introduction of sweeping tariffs has led to a downturn in bank stock values, contrasting sharply with the initial optimism anticipated under Trump’s administration.
Analysts warn that these tariffs might reignite inflation pressures and stifle economic expansion, potentially diminishing businesses’ willingness to engage in mergers and lending activities. Additionally, a decline in consumer sentiment could adversely affect lending and spending habits.
BANK LEADERS ADDRESS TRADE POLICY UNCERTAINTY
Mark Mason, Citigroup’s Chief Financial Officer, highlighted the significant uncertainty surrounding trade policies and their implications for future growth, stating, “There’s obviously a great deal of uncertainty around tariffs and trade policy and how that will evolve, but also uncertainty around the broader agenda, deregulation, tax policy, etc.”
The bank’s cost of credit for the quarter was recorded at $2.72 billion, an increase from $2.37 billion in the same period last year.
BANKING AND WEALTH MANAGEMENT DIVISIONS SHOW PROMISE
Two sectors recently overhauled by CEO Fraser demonstrated notable revenue growth in the first quarter. The banking division, overseen by former JPMorgan Chase executive Viswas Raghavan, saw a 12% revenue increase, reaching $2 billion.
Additionally, investment banking fees surged by 14% to $1.1 billion, attributed to increased advisory work on significant transactions, including Johnson & Johnson’s acquisition of neurological drug manufacturer Intra-Cellular Therapies for $14.6 billion.
EXPERTS ADVISE CALM AMID MARKET INSTABILITY
Within the wealth management sector, directed by former Bank of America executive Andy Sieg, revenue rose by a remarkable 24% to a record $2.1 billion.
Citi is currently undergoing a multi-year initiative led by CEO Fraser to streamline operations and enhance financial returns while addressing long-standing regulatory deficiencies.
Despite completing much of its restructuring last year, Citigroup continues to focus on improving its data management and regulatory compliance, notably reducing executive bonuses in 2024 due to insufficient progress in compliance efforts.
Finance Newso BUSINESS NOW AVAILABLE ON-THE-GO
According to recent reports from Reuters, Citigroup plans to reduce its dependence on IT contractors while aiming to recruit thousands of new employees in the tech sector to address ongoing regulatory requirements.
In the first quarter, the bank repurchased $1.75 billion of its shares, exceeding prior expectations of $1.5 billion, and aims to sustain a similar level of share repurchases in the upcoming quarter.
