(July 14): Citigroup Inc’s stock traders notched a record revenue haul, leading a slew of the firm's key business lines in surpassing Wall Street’s expectations.
Revenue from equities trading surged 45% to US$2.3 billion in the second quarter from a year earlier, about 11% higher than the record set in this year’s opening months. The bank is trying to lure in more hedge funds to grow the franchise, which is smaller than those run by its top Wall Street rivals.
Altogether, four of the company’s five main divisions — banking, services, markets and wealth — surpassed analysts’ estimates compiled by Bloomberg, according to figures posted Tuesday. Earnings per share amounted to US$3.15, exceeding all 20 analyst estimates.
Like other major banks, Citi’s investment bankers raked in the most since 2021, when pandemic turmoil and rock-bottom interest rates set off a surge of dealmaking across the industry. The unit has been shaking up managers after Vis Raghavan joined in 2024 to take it over.
The results are the first since CEO Jane Fraser laid out new profit targets in May that left shareholders broadly optimistic about the company’s direction. The stock has nearly doubled over the past 18 months as she continued years of streamlining Citi’s global operations.
At an investor day in May, Fraser predicted Citi’s return on tangible common equity — a key measure of profitability — would reach about 14% to 15% by 2031. The firm posted 13% for the second quarter, beating the 11.3% estimated by analysts.
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That adds to momentum for the bank’s rebuild, which last month received plaudits from US President Donald Trump on social media. His son Eric recently set up a trust at the firm with his father’s money. Fraser has made a concerted effort to improve her company’s relations in Washington.
Despite beating expectations, the 45% growth posted by Citi’s equities unit was slower than that of its larger rivals like JPMorgan Chase & Co and Goldman Sachs Group Inc, which posted 86% and 72% growth respectively.
The bank’s efficiency ratio, a metric that indicates how much it spends for each dollar of revenue generated, fell to about 57%, bringing the firm closer to more profitable rivals such as JPMorgan, whose ratio stood at 54% in the first quarter.
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Still, the consumer cards business fell just short of analysts’ estimates, as expenses rose 10% from a year earlier because of higher severance costs. The unit is reworking parts of its team as it integrates Barclays plc’s portion of its cards portfolio in partnership with American Airlines Group Inc.
Uploaded by Arion Yeow
