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Citigroup’s First Quarter-Earnings Beat Expectations But Investment Banking

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Citigroup (C) reported first-quarter per-share earnings that easily beat market expectations, but its investment banking, equity market and fixed income revenues fell.

The New York-based bank posted earnings of $1.87 per diluted share, topping the $1.79 expected by Capital IQ on a GAAP basis and normalized of $1.80, and above the $1.68 in the prior-year quarter. Its adjusted net income was $4.71 billion, above the $4.62 billion reported last year.

“Our earnings reflect the progress we are making to improve our return on and return of capital,” Michael Corbat, Citigroup’s chief executive, said in a statement. “Both our consumer and institutional businesses performed well and we saw good momentum in those areas where we have been investing, such as US Branded Cards, Treasury and Trade Solutions, and Investment Banking.”

Revenue was $18.57 billion, just above Capital IQ’s expectation of $18.55 billion but 2% lower than the year before.

The revenue for the bank’s institutional clients group fell 2% to $9.7 billion as growth in banking was more than offset by a decline in its market and securities services business, Citigroup said.

Investment banking revenues fell 20% in the first quarter “as strong growth in advisory and investment grade debt underwriting more than offset a decline in equity underwriting driven by a lower market wallet,” the bank said.

Advisory revenues rose 76% to $378 million while equity underwriting revenues fell 20% to $172 million and debt underwriting revenues gained 15% to $804 million. Corporate lending revenue rose 9% to $569 million, and markets and securities fell 6% to $4.7 billion.

Fixed income revenue fell 1% to $3.5 billion “as strength in rates and spread products was partially offset by weakness in foreign exchange, as a result of low currency volatility in the current quarter while corporate client activity remained stable,” the bank said.

It said equity market revenues fell 24% to $842 million, “reflecting lower market volumes and client financing balances.”

Price: 67.43 Price Change: +0.01 Percent Change: +0.01

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