Citi Exceeds Profit Expectations with Investment Banking Surge

Dive into Citi's impressive profit growth driven by a surge in investment banking and services strength. Stay informed with our detailed analysis.

Citigroup beat Wall Street expectations for second-quarter profit, reporting a profit of $1.52 per share in the three months ended June 30, above analysts' expectations of $1.39. The third largest U.S. lender saw a 7.2% shareholder return in the second quarter, falling short of its target of 11% to 12%. Despite the strong results in investment banking, markets, and services revenue, shares fell 2% as investors expressed concerns about expenses, dividends, and market share.

The results come shortly after U.S. regulators fined Citi $136 million for insufficient progress in fixing data management issues identified in 2020. The bank also announced potential stock acquisitions of up to $1 billion over the next quarter and aims to reduce its workforce by 20,000 over the next two years. Revenue in the second quarter increased by 4% to $20.1 billion, with a $400 million gain from the conversion and partial sale of Visa stock in May.

Citi's five businesses—services, markets, banking, U.S. personal banking, and wealth—saw individual earnings growth in the second quarter. Investment banking fees surged by 60% to $853 million, driving a 38% increase in revenue for the banking division. Services revenue increased by 3% to $4.7 billion, while markets revenue climbed 6% to $5.1 billion, boosted by a 37% jump in equities trading revenue.

Operating expenses decreased by 2% to $13.4 billion in the quarter, with full-year expenses expected to be at the high end of the forecasted range. Citi's wealth management division, a key part of CEO Jane Fraser's growth strategy, saw a 2% increase in revenue to $1.8 billion. U.S. personal banking revenue grew by 6% to $4.9 billion, driven by growth in branded cards.

Analysts view 2024 as a transitional year for Citi as it undergoes a leaner restructuring under Fraser's leadership. Investors have responded positively to Fraser's efforts, with a 28% increase in the bank's stock this year, outperforming competitors like JPMorgan and Bank of America.

Citigroup's second-quarter results exceeded expectations in key revenue areas, despite concerns about expenses and market share. The bank's focus on restructuring and growth strategies has garnered positive investor response.