Citigroup Shares Soar as Q2 Earnings Beat Expectations, CEO Jane Fraser Optimistic Despite Macro Challenges

Citigroup Stock Rises After Beating Q2 Expectations

(Image: Jane Fraser, Citi, at WEF, Davos, Jan. 17, 2023. – Adam Galica | CNBC)

Citigroup shares saw a boost in premarket trading on Friday following the release of its second-quarter earnings report. The banking giant reported earnings per share of $1.33, surpassing Refinitiv analysts’ estimate of $1.30. Additionally, Citigroup’s revenue came in at $19.44 billion, slightly higher than the expected $19.29 billion.

Shares of Citigroup rose over 1% in premarket trading and have seen a year-to-date gain of 5.4%. This performance has outpaced the SPDR S&P Bank ETF (KBE), which is down 14.8% for the year.

CEO Jane Fraser attributed the strong results to the company’s diversified business model and strong balance sheet. However, while Citigroup beat expectations, its revenue declined 1% compared to the prior year. This dip was primarily due to a decrease in the markets and investment banking businesses, which were impacted by the uncertain macroenvironment and low volatility.

Net income for Citigroup fell 6% to $2.9 billion when compared to the same quarter in the previous year. Higher expenses, a high cost of credit, and lower revenue contributed to this decline. Fraser noted that markets revenues were down, partially due to clients remaining on the sidelines amidst the U.S. debt limit issue. Additionally, the long-anticipated rebound in investment banking has yet to materialize, resulting in a disappointing quarter for the bank.

On a positive note, revenue from personal banking and wealth management increased by 6% in the quarter, reaching $6.4 billion, driven by strong loan growth. Citigroup returned a total of $2 billion to shareholders through common dividends and share buybacks during Q2.

In summary, Citigroup’s second-quarter performance exceeded expectations, with higher earnings per share and revenue. The bank’s diversified business model and strong balance sheet played a significant role in achieving these results. However, the decline in markets and investment banking sectors, combined with the macroeconomic uncertainty and low volatility, impacted overall revenue. Citigroup remains optimistic about future growth opportunities as it focuses on a rebound in investment banking and continued loan growth in its personal banking segment.