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Citigroup, Inc. NYSE:C NYSE Ordinary Share
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Citigroup Posts Higher Profit, But Revenue Slips -- Update

15/04/2019 2:47pm

Dow Jones News


Citigroup, Inc. (NYSE:C)
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By Telis Demos 

Citigroup Inc. said Monday its first-quarter profit rose 2% from a year ago, boosted by growth in U.S. consumer banking and solid trading performance compared with rivals.

The bank posted a quarterly profit of $4.7 billion, or $1.87 a share. Analysts polled by Refinitiv had expected $1.80 a share.

Revenue was $18.6 billion, down 2% from $18.9 billion a year ago. Analysts expected $18.6 billion.

Citigroup, like its big-bank rivals, is aiming to bounce back from a tough fourth quarter. Its vast trading unit has been struggling in unfavorable market conditions, adding a fresh challenge to the bank's plan to meet a series of aggressive financial goals over the next two years.

First-quarter trading revenue at Citigroup fell 5% to $4.3 billion. Citigroup and other banks have warned that client activity in early 2019 still hasn't rebounded after evaporating at the end of last year.

But Citigroup did better than rivals in the first quarter. Trading revenue at Goldman Sachs Group Inc. and JPMorgan Chase & Co. was both down 17% or more from a year ago. Notably, Citigroup's huge fixed-income business rose 1% from a year ago to $3.5 billion.

Investment-banking revenue rose 20% from a year ago, to $1.4 billion, thanks to a 76% surge in mergers-and-acquisitions advisory revenue. Citigroup has been trying to convert more of its clients in day-to-day banking into deal-making clients.

Citigroup is back in growth mode after spending much of the decade since the financial crisis regaining strength. Chief Executive Michael Corbat has been shuffling the bank's leadership team to put the emphasis on growth, after years of shrinking and restructuring.

To account up for revenue pressure and to stay on track to meet its return targets, Citigroup has been cutting expenses. The bank's expenses were $10.6 billion for the first quarter, down 3% from a year ago.

Citigroup is counting on a major turnaround in its consumer business, particularly U.S. credit cards and retail banking, to boost its overall returns.

That effort bore fruit in the latest quarter. U.S. consumer-banking revenue of $5.2 billion was up 4% from a year earlier, after adjusting for the sale of a co-brand credit-card portfolio. The bank's proprietary U.S. credit-card unit was up 5% from a year ago, to $2.2 billion. The bank had given many consumers interest-free borrowing offers to build the business, but that cost the bank interest income. Now, many of those offers have rolled off, and the same balances are now making money.

For the quarter, Citigroup produced a return on tangible common equity of 11.9%. It has targeted a return of 12% for 2019.

Write to Telis Demos at telis.demos@wsj.com

 

(END) Dow Jones Newswires

April 15, 2019 09:32 ET (13:32 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.

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