Citigroup (C) posted stronger-than-expected first quarter earnings Thursday as fee income partly offset the deal-making slump that has loped profits from investment banking group across Wall Street.
Citigroup said earnings for the three months ending in March were pegged at $2.02 per share, down 44.2% from the same period last year but well ahead of the Street consensus forecast of $1.53 per share.
Group revenues, Citigroup said, fell 0.7% to $19.33 billion, coming in well ahead of analysts' estimates of an $18.2 billion tally. Institutional Client Group revenues were down 2% from last year, the bank said, a decline it put down to a slump in investment banking fees. Revenues in Treasury and trade solutions, its global business, rose 18%, thanks to "fee growth, trade loans and cross-border transactions ... buoyed by higher rates."
The bank also set aside $1.9 billion in reserves to set against bad loans and other exposures linked to Russia's war on Ukraine, following a similar move -- and caution -- from JPMorgan (JPM) CEO Jamie Dimon earlier in the week.
"While the geopolitical and macro environment has become more volatile, we are executing the strategy we announced at our recent Investor Day," said CEO Jane Fraser. "In Markets, our traders navigated the environment quite well, aided by our mix, with strong gains in FX and commodities. However, the current macro backdrop impacted Investment Banking as we saw a contraction in capital market activity. This remains a key area of investment for us.”
“We returned $4 billion to our shareholders during the first quarter and we now have about 6% fewer common shares outstanding than we did a year ago," she added. "While we are making necessary investments in our infrastructure, risk and controls and our businesses, we remain committed to improving our returns over the medium term."
Citigroup shares were marked 1.8% higher in late trading Thursday following the earnings release to change hands at $51.06 each.
Citigroup's earnings followed a miss from its larger rival, JPMorgan yesterday, as the country's biggest bank set aside nearly $1 billion to cover potential losses linked to surging inflation and the war in Ukraine.
CEO Jamie Dimon cautioned earlier this month that the impact of the Russia-Ukraine conflict on the bank's profits, while also warning that rate hikes from the Federal Reserve "could be significantly higher than the market expects' between now and the end of the year.
Global merger activity fell more than 20% from last year's SPAC-fueled first quarter frenzy, data from Refinitiv indicated earlier this month, with the total value of transactions pegged at around $1 trillion, highlighted by Microsoft's (MSFT) $69 acquisition of video game maker Activision Blizzard (ATVI).
