Citigroup posts better-than-expected second quarter earnings

(Sharecast News) - Citigroup posted stronger-than-expected earnings for the second quarter on Tuesday, lifted by robust growth across its core businesses and a standout performance in markets and investment banking. The bank reported net income of $4bn, up 25% from the same period last year, with earnings per share rising to $1.96 from $1.52.

Revenue increased 8% to $21.7bn, surpassing analyst estimates of $20.98bn.

CEO Jane Fraser described the quarter as "another very good" one for the group, highlighting the resilience and breadth of its operations.

"We're improving the performance of each of our businesses to take share and drive higher returns," she said, adding that Citi's services division "continues to show why this high-return business is our crown jewel".

Markets revenue climbed 16% year-on-year, with equities recording their best second quarter since 2020.

Investment banking revenues rose 18%, despite hedging-related losses, as the bank participated in a series of major transactions.

Wealth management also grew strongly, with revenue up 20%, while US personal banking benefited from growth in branded cards and improved deposit spreads in retail banking.

Despite the top-line growth, Citi faced a 16% rise in cost of credit, driven by a higher allowance for potential loan losses amid a more cautious economic outlook.

Operating expenses were also higher year-on-year.

The bank returned $3.1bn to shareholders through dividends and share buybacks, representing a payout ratio of 82%.

In early July, Citigroup raised its quarterly dividend to 60 cents from 56 cents following the Federal Reserve's annual stress test.

Its Common Equity Tier 1 (CET1) capital ratio stood at 13.5%, while return on tangible common equity (RoTCE) was 8.7%.

Looking ahead, Citi said it now expected full-year revenue to reach $84bn, at the top end of its previous guidance range.

The bank also lifted its net interest income growth forecast to about 4%, from a prior range of 2% to 3%.

Fraser reiterated the bank's longer-term ambitions, saying the 10% to 11% RoTCE target for 2026 is "a waypoint, not a destination".

"The actions we've taken have set up Citi to succeed long term, drive returns above that level and continue to create value for shareholders," she added.

At 1002 EDT (1502 BST), shares in Citigroup were up 1.5% in New York at $88.81.

Reporting by Josh White for Sharecast.com.