Citi Shares Pop as Bank Beats on Earnings

Ticker Symbol: C

Citibank, one of the largest global banks, reported its second quarter financial report today. The results beat earnings expectations that bucked the trend across the large U.S. banks that have reported earnings so far. J.P. Morgan, Morgan Stanley, and Wells Fargo, the other large globally systemically important banks, all missed Wall Street’s expectations for adjusted earnings per share. Citi shares were up 5% at the start of trading in New York.

The bank reported fixed-income, commodities, and currencies trading revenue of $4.08 billion, up 31% year over year, and well ahead of the $3.83 billion expected from analysts. Equities sales and trading revenue met expectations at $1.24 billion but were still up 8% year over year. Investment banking revenue, however, followed the trend from the investment banking results from other large U.S. banks and came in below expectations at $ 805 billion, down 46% from 2021.

Aggregate revenue beat with $19.6 billion reported versus the average analyst estimate of $18.43 billion. The figure also represented a 12% jump from the same period last year. The bank reported adjusted earnings per share of $2.19 compared to the $1.70 per share expected. Earnings were boosted by good cost control at the bank. Management said the efficiency ratio improved to 56% well ahead of the 68.5% estimated. A bank’s efficiency ratio is its operating expenses relative to its total adjusted income.

Citi is one of the world’s largest credit-card issuers and the bank reported solid results in that division. Branded card revenue was up 10% to $2.2 billion as interest earnings balances increased during the quarter. Spending on cards was up 18% as prices rise globally and new account sign-ups for Citi’s credit cards were also up 18% year over year. Retail cards, Citigroup’s partner card program, reported revenue of $1.3 billion, up 7% from 2021.

Management also reported that it would suspend its share buyback program, following in J.P. Morgan’s footsteps from yesterday, after regulators have increased the reserve capital requirements for large systemically important banks. Additionally, Citibank’s Chief Executive Officer Jane Fraser said the bank is reevaluating all its options for the firm’s Russia business after previously indicating that it was exiting it completely. A more creative set of options could reduce the losses Citi would have to take when and if it exits the business.

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