Citigroup kicked off Wall Street’s earnings season today by trumping market expectations, reporting a rise in profits and revenues during the second quarter of 2019.
America’s third largest bank posted profit of $4.79bn (£3.82bn), or $1.95 per share, during the three month period, rising 20 per cent and beating $1.80 per share estimates given by Refinitiv.
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Bolstered by a one-time $350m boon from its investment in electronic trading platform Tradeweb, revenues climbed two per cent to $18.76bn.
However, without that gain, Citigroup’s core trading revenue would have tumbled five per cent when compared to the same quarter in the previous year.
Market volatility has rocked trading desks within investment banks such as Citigroup over recent months, with fears of a slowdown in the global economy.
Signs from US Federal Reserve chair Jerome Powell that interest rates could be cut in July have also caused worry in the sector, which would likely be hit by a fall in lending profitability.
Yet a reduction in costs as well as gains in consumer lending helped to counter troubles in the New York-based firm’s trading division.
The multinational investment bank’s boss Michael Corbat struck a confident tone this afternoon, saying: “We navigated an uncertain environment successfully by executing our strategy, and by showing disciplined expense, credit and risk management.”
He added: “We have good momentum and solid growth across our consumer franchise, particularly in the US…We remain committed to improve our returns on capital while continuing to provide meaningful capital return to our shareholders.”
Citigroup’s share price has climbed 38 per cent over the year, outperforming many of its banking rivals.
David Madden, market analyst at CMC Markets, said: “Citigroup shares are slightly lower this afternoon even though the company reported respectable second-quarter figures…The trading departments underperformed as did the investment banking unit. Last week, the stock hit its highest level since October 2018, so it seems that investors were expecting solid figures today, now we are seeing a little pullback.”
Later this week US corporate giants Goldman Sachs, JP Morgan Chase and Bank of America are among the other Wall Street firms that will report quarterly earnings.