Citigroup Q1 results: Profit soars on 23% jump in stock trading revenue

Citigroup's profit surged in the first quarter as its traders reaped a windfall from volatile markets that fueled client activity. The third-largest US lender's earnings echoed those of Wall Street rivals, including JPMorgan Chase, Goldman Sachs and Morgan Stanley, where results were also lifted by stronger equities trading.

 

Stock trading jumped in the first three months of the year as investors rejigged their portfolios during a period of heightened uncertainty over President Donald Trump's tariffs and the emergence of Chinese startup DeepSeek's low-cost AI model.

"We continue to help our clients navigate an uncertain environment," CEO Jane Fraser said in a statement. 

"When all is said and done, and long-standing trade imbalances and other structural shifts are behind us, the US will still be the world's leading economy, and the dollar will remain the reserve currency."   

Citi's markets revenue rose 12 per cent to $6 billion in the quarter, surpassing its earlier expectations for a mid-single digit percentage gain, it said on Tuesday. Equity revenue surged 23 per cent, buoyed by more client activity. 

Fixed income revenue, a major driver of Citi's markets business, jumped 8 per cent to $4.5 billion, lifted by rates and currencies. 

The bank's net income rose to $4.1 billion, or $1.96 per share, in the three months ended March 31. That compares with $3.37 billion, or $1.58 per share, a year earlier. 

Shares of the New York-based bank were marginally higher in premarket trading. They have declined 10.2 per cent so far this year as of Monday close. 

The bank posted a 9.1 per cent return on tangible common equity (ROTCE), improving from 7 per cent last year and approaching its profitability target for next year of 10 per cent to 11 per cent. Earlier this year, Fraser reduced estimates for the closely-watched target.   

Two divisions recently revamped by the CEO showed improvement in the first quarter. Banking, led by former JPMorgan Chase executive Viswas Raghavan, grew revenue by 12 per cent to $2 billion. 

In the wealth management unit run by former Bank of America executive Andy Sieg, revenue rose 24 per cent to a record $2.1 billion. 

CEOs across Wall Street have warned about the potential fallout of the US tariffs, which have clouded the economic outlook and prompted recession fears. Bank stocks were pummeled when the sweeping tariffs were announced earlier this month, a stark turnaround from the optimism at the start of the year for Trump's pro-business agenda. 

Tariffs could reignite inflation and constrain economic growth, curbing companies' appetite for dealmaking and borrowing. Weakening consumer sentiment could also weigh on spending and loan demand. 

Citi is undergoing a multi-year effort under CEO Jane Fraser to streamline its operations and improve returns, while trying to fix longstanding regulatory problems.   

While Citi completed much of its reorganisation last year, the bank is still working on improving its data quality management and regulatory reporting. 

The bank also cut bonuses paid in 2024 to top executives for not making enough progress on the compliance issues.

Citi plans to slash its reliance on information technology contractors and hire thousands of employees for IT as it grapples with regulatory punishments, Reuters reported last month.