Citigroup, Inc. (NYSE:C) stock rose on Tuesday after the bank reported stronger-than-expected second-quarter results, driven by broad-based growth across its businesses.
Strong First-Quarter Financial Performance
The bank posted revenue, net of interest expense, of $24.77 billion, up 14% from a year earlier and above analyst estimates of $23.74 billion. Excluding foreign exchange impacts, revenue increased 13%.
Net income climbed 45% to $5.83 billion, while earnings per share of $3.15 topped expectations of $2.72.
Net interest income rose 13%, driven by growth across each of Citi’s five businesses and Legacy Franchises.
Non-interest revenue increased 18%, driven by growth in All Other, Banking, Services, and Wealth, partially offset by declines in U.S. Consumer Cards (USCC) and Markets.
Expenses, Profitability, and Capital Position
Operating expenses rose 5% to $14.2 billion, while the efficiency ratio declined by about 530 basis points to 57.4%, down from 62.7% a year earlier. Return on average tangible common equity increased to 13.0%.
The bank’s Common Equity Tier 1 capital ratio stood at 12.8%, above regulatory requirements of 11.6%. Cost of credit fell 12% to $2.5 billion, reflecting $2.4 billion of net credit losses and a net allowance for credit losses (ACL) build of $118 million, driven by portfolio growth and changes to certain macroeconomic variables.
Segment Performance Highlights
Performance was strong across segments. Services revenue rose 18% to $6.4 billion, while markets revenue increased 17% to $7.0 billion.
Banking revenue climbed 34% to $1.9 billion, including a 44% rise in investment banking revenue to $1.5 billion. Wealth revenue grew 13% to $3.2 billion, and U.S. consumer cards revenue rose 1% to $4.5 billion.
Revenue in the “all other” category increased 1% to $1.7 billion.
Outlook and Guidance
Citigroup reaffirmed its 2026 outlook, expecting net interest income excluding markets to rise 5% to 6%. It also reiterated its forecast for branded cards’ net credit losses at 4.0% to 4.5%.
CFO Gonzalo Luchetti told analysts during the company’s earnings call that Citi has been late to investing in equities and still has work to do to expand that business, Bloomberg reported on Tuesday. He said the effort will take time, even after equities trading revenue rose 45% to $2.3 billion, topping analyst estimates.
CEO Jane Fraser’s turnaround plan also gained traction after Citi posted a 13% return on tangible common equity in the second quarter, beating analysts’ 11.3% estimate. Fraser had told investors in May that Citi aims to lift that profitability measure to about 14% to 15% by 2031.
Analysts tracked by Bloomberg had expected weaker results across several areas, but four of Citi’s five main divisions — banking, services, markets, and wealth — beat estimates. Earnings of $3.15 per share also topped all 20 analyst forecasts.
Citi’s investment bankers delivered their strongest revenue since 2021, helped by stronger dealmaking activity across the industry. However, the bank’s equities growth still trailed larger rivals, including JPMorgan Chase and Goldman Sachs as per the Bloomberg report.
C Price Action: Citigroup shares were up 1.47% at $142.78 at the time of publication on Tuesday. The stock is approaching its 52-week high of $147.96, according to Benzinga Pro data.
Photo via Shutterstock
Login to comment