Citigroup beats forecasts after strong quarter for investment banking
(ShareCast News) - Citigroup's improving second-quarter revenue and earnings both beat Wall Street forecasts, helped by its best investment banking performance in seven years.
Revenues for the second quarter of $17.9bn were up 2% on the same period last year, beating consensus estimates of $17.4bn.
Growth was driven by institutional and global consumer banking, but slowed by falls in corporate banking.
Net income fell 3% $3.9bn as the slightly higher revenues were outweighed by higher cost of credit and operating expenses, as well as a higher effective tax rate.
Adjusted earnings per share $1.28 for the quarter were up 3% on the same period last year, well ahead of the consensus estimate of $1.21.
Citi chief executive officer Michael Corbat pointed to continued momentum in the businesses, with loan and revenue growth across both sides.
"Our Global Consumer Bank posted revenue growth in all three regions. Our institutional clients group had a very strong quarter all-around, including its best investment banking performance in seven years.
The net income helped generate additional regulatory capital, lifting the common equity tier 1 (CET1) capital ratio to 13.0% from 12.8% the first quarter, well above the 11.5% Corbat believes is needed to prudently operate the firm.
Citi recently announced a capital plan that includes an $18.9bn return and Cabat said, "we are clearly on course to increase both the return on capital and return of capital for our shareholders".
Citi's beat added to the positive mood on the Street after a strong earnings beat posted by rival JPMorgan Chase shortly before on Friday, despite widely-anticipated weakness in its markets unit.
JPM saw revenues rise 5%, driving a 13% increase in net income, with boss Jamie Dimon describing the global economic backdrop as "stable-to-improving" while announcing increases to the bank's capital return plans