Citigroup beats estimates by comfortable margin

A sharp drop in revenues across most of its units cut into Citigroup’s bottom line in the first quarter, with trading and investment banking taking the biggest hits.

The global lender’s net income plummeted 27% to reach $3.5bn as revenues fell 11% to $17.6bn over the first three months of the year.

That led to a drop in earnings per share from $1.51 to $1.10, versus analysts forecast for EPS of $1.03 and sales at $17.4bn..

Michael Corbat, Citigroup’s chief, said the bank’s results had “clearly suffered” from weak investor sentiment during the quarter.

Revenues dropped 9% at Citicorp and by another 29% at Citi Holdings, its ‘bad bank’.

Global consumer banking saw revenues decline 6% to $7.8bn while at the institutional clients group they were down 12% to $8bn.

Markets and securities services revenues slumped 15% to $4.1bn.

However, Citigroup continued growing its loans and deposits at its core business, while at the same time continuing to wind down Citi Holdings to such an extent that it was to stop reporting its results separately, given its small size relative to the group’s total balance sheet, Corbat went on to explain.

Loans were roughly steady at $619bn and deposits by another 4%. At constant currencies each of those rose by 6% and 5%.

Energy patch leaves a dent in loan quality

Like other large-cap US banks, Citigroup topped up its loan loss reserves by $233m, mainly as a result of loans related to the energy sector.

Operating expenses decreased by 3% to $10.5bn, driven by lower expenses at Citi Holdings, legal and related expenses and a smaller impact linked to foreign exchange translation effects.

Nevertheless, the bank’s cost of credit jumped 7% in the first quarter to $2bn.

Net income in the first quarter of 2015 included a one cent charged linked to credit and debt valuation adjustments, Citi said.

The effective tax rate for the first quarter of 2016 was 30.0%, versus 31.0% for the comparable period one year ago.

Common equity Tier 1 capital stood at 12.3 at quarter end, versus 11.1% in the prior year period.

As of 13:43 BST shares in Citigroup were 2.67% higher to $46.18.