Citigroup (C) 2Q 2022 earnings beats

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Citigroup on Friday posted second-quarter outcomes that beat analysts’ expectations for revenue and income because the agency benefited from rising rates of interest and robust buying and selling outcomes.

Here’s what the financial institution reported in contrast with what Wall Street was anticipating, primarily based on a survey of analysts by Refinitiv:

  • Earnings per share: $2.19 vs $1.68 anticipated
  • Revenue: $19.64 billion vs $18.22 billion anticipated

Shares of the corporate surged 13% in New York buying and selling, the financial institution’s greatest post-earnings inventory acquire in additional than 20 years, in line with Refinitiv information.

Profit declined 27% to $4.55 billion, or $2.19 per share, from $6.19 billion, or $2.85, a yr earlier, the New York-based financial institution mentioned in a press release, because it put aside funds for anticipated mortgage losses. But earnings handily exceeded expectations for the quarter as analysts have been slashing estimates for the business in latest weeks.

Revenue rose a bigger-than-expected 11% within the quarter to $19.64 billion, greater than $1 billion over estimates, because the financial institution reaped extra curiosity revenue and noticed robust ends in its buying and selling division and institutional companies enterprise. Net curiosity revenue jumped 14% to $11.96 billion, topping the $11.21 billion estimate of analysts surveyed by Street Account.

Of the 4 main banks to report second-quarter outcomes this week, solely Citigroup topped expectations for income.

“In a difficult macro and geopolitical surroundings, our group delivered stable outcomes and we’re in a robust place to climate unsure instances, given our liquidity, credit score high quality and reserve ranges,” Citigroup CEO Jane Fraser mentioned within the launch.

Corporate money administration, Wall Street buying and selling and shopper bank cards carried out properly within the quarter, she famous.

But not all of the information was constructive. Like JPMorgan Chase on Thursday, Citigroup disclosed that additionally it is pausing share repurchases. After final month’s Federal Reserve stress check, some banks had been caught with much less capital than wanted forward of more and more stringent necessities. By freezing dividends and pausing buybacks, the banks can stockpile capital to assist them hit their targets.

Citigroup will restart buybacks “as quickly as it’s prudent” to take action, Fraser instructed analysts.

The agency’s institutional purchasers group posted a 20% soar in income to $11.4 billion, roughly $1.1 billion greater than analysts had anticipated, pushed by robust buying and selling outcomes and progress within the financial institution’s company money administration enterprise. Treasury and commerce options generated a 33% enhance in income to $3 billion.

Fixed revenue buying and selling income surged 31% to $4.1 billion, edging out the $4.06 billion estimate, due to robust exercise on charges, currencies and commodities desks, Citigroup mentioned. Equities buying and selling income rose 8% to $1.2 billion, slightly below the $1.31 billion estimate.

Similar to friends, funding banking income dropped a steep 46% to $805 million, lacking the $922.8 million estimate.

Bank shares have been hammered this yr over considerations that the U.S. is dealing with a recession, which might result in a surge in mortgage losses. Like the remainder of the business, Citigroup can be contending with a pointy decline in funding banking income, offset by the enhance to buying and selling ends in the quarter.

Despite Friday’s inventory acquire, Citigroup stays the most cost effective of the six greatest U.S. banks from a valuation perspective. The inventory was down 27% in 2022, as of Thursday’s shut, when its shares hit a 52-week low.

To assist flip across the agency, Fraser has introduced plans to exit retail banking markets exterior the U.S. and set medium-term return targets in March.

Earlier Friday, Wells Fargo posted combined outcomes because the financial institution put aside funds for unhealthy loans and was stung by declines in its fairness holdings.

On Thursday, larger rival JPMorgan posted outcomes that missed expectations because it constructed reserves for unhealthy loans, and Morgan Stanley disillusioned on a worse-than-expected slowdown in funding banking charges.

Bank of America and Goldman Sachs are scheduled to report outcomes Monday.

Correction: Net curiosity revenue jumped 14% to $11.96 billion. An earlier model misstated the share.

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