By Peter Rudegeair
Citigroup Inc. said Thursday that its first-quarter profit
jumped a larger-than-expected 21% as the lender slashed costs and
enjoyed an uptick in investment-banking revenue.
Shares edged up 2% to $54.25 premarket.
The New York-based bank reported a profit of $4.77 billion, or
$1.51 a share. That compares with $3.94 billion, or $1.23 a share,
in the same period of 2014. Excluding one-time items, per-share
earnings were $1.52 in the latest period, beating the $1.39 a share
projected by analysts polled by Thomson Reuters.
Revenue fell 2.3% to $19.74 billion. On an adjusted basis,
revenue fell 1.9% to $19.81 billion. Analysts had expected $19.82
billion.
Citigroup, under Chief Executive Michael Corbat, has been
working to dispose of peripheral business units, resolve
outstanding legal matters and repair relationships with regulators.
Last month, the bank unveiled the sale of its OneMain Financial
subprime lending unit to Springleaf Holdings Inc. as well as the
first increase in its dividend since the financial crisis after it
passed the Federal Reserve's annual stress test.
The bank's shares have fallen 1.7% since the start of 2015
compared with a 0.9% fall in the KBW index of bank stocks over the
same period.
Trading revenue, excluding an accounting adjustment, decreased
9.5% to $4.36 billion from $4.81 billion in the first quarter of
2014. That compares to a 5% drop at Bank of America Corp.
Finance Chief John Gerspach said in March that results would be
down in the mid-to-high single digits because of a "modest loss"
tied to the sharp, unexpected swings in the Swiss franc as well as
weakness in trading spread products such as corporate bonds or
mortgage-backed securities. Bond, currency and commodity trading
revenue fell 11% to $3.48 billion while stock trading revenue fell
1% to $873 million.
In investment banking, Citigroup earned $298 million in fees
from advising on mergers in the first quarter, up 70% from $175
million in the same period of 2014. Merger advisory revenue was up
42% at J.P. Morgan and 50% at Bank of America. Overall investment
banking fees were up 14% to $1.2 billion.
Profits in Citi Holdings, where Citigroup stores the "bad bank"
assets that it wants to sell, increased to $146 million from a loss
of $284 million in the first quarter of 2014. The bank has said it
expects Citi Holdings to at least break even for 2015, and it
started to turn a profit in the second half of last year.
Citicorp, which houses Citigroup's global consumer and corporate
banking divisions, reported a profit of $4.62 billion. That is an
increase of about 9% from the $4.23 billion it reported in the same
period a year ago. Global consumer banking profits rose 3.8% to
$1.73 billion, while profits were roughly flat at $2.93 billion at
Citigroup's institutional clients group.
Citigroup slashed expenses 10% to $10.88 billion from $12.15
billion a year earlier. Legal and repositioning costs plunged 65%
to $403 million from $1.16 billion in the first quarter of 2014.
Citigroup has said it is cooperating with an investigation from the
U.S. Department of Justice into potential manipulation in the
foreign-exchange market.
Within Citicorp, expenses as a share of revenue were 54%
compared with 65% for 2014. Mr. Corbat has said he wants to get the
so-called "efficiency ratio" down to the mid-50s for Citicorp in
2015.
Write to Peter Rudegeair at peter.rudegeair@wsj.com
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