Citi profit climbs on investment banking surge, services strength
By Tatiana Bautzer and Manya Saini
July 12 (Reuters) -Citigroup's C.N profit rose in the second quarter, boosted by a 60% jump in investment banking revenue and gains in its services division.
Net income climbed to $3.2 billion, or $1.52 per share, in the three months ended June 30, the third largest U.S. lender said on Friday. That compares with $2.9 billion, or $1.33 per share, a year earlier.
The results come two days after U.S. regulators fined Citi $136 million for making "insufficient progress" in fixing data management problems identified in 2020. Regulators also required the lender to demonstrate it was putting enough resources toward those efforts.
Citi had already booked the penalties and additional investments on the data work in the second quarter.
CEO Jane Fraser is carrying out a sweeping overhaul in an effort to improve the bank's performance, cut costs and simplify its sprawling businesses. As part of the turnaround, Citi aims to shrink its workforce by 20,000 over the next two years.
Revenue in the second quarter came in at $20.1 billion, up 4% from a year earlier,buoyed by a $400 million gain from the conversion and partial sale of Visa stock in May.
Citi now breaks out earnings individually for its five businesses — services, markets, banking, U.S. personal banking and wealth, which were previously housed under broader divisions.
The new structure is part of Fraser's efforts to cut bureaucracy and increase profits. Under it, the leaders of the segments report directly to the CEO.
Investment banking fees jumped 60% in the second quarter to $853 million.The surge comes as a prolonged industry-wide slump in deals finally shows signs of a meaningful recovery.
Citi hired JPMorgan Chase veteran Viswas Raghavan as head of banking earlier this year. Fraser has expressed high hopes for Raghavan, who is tasked with revitalizing the division catering to multinational corporations.
Services revenue increased 3% to $4.7 billion. The unit houses Citi's treasury and trade solutions business, which the company touts as its crown jewel. The business had flat revenue this quarter, at $3.4 billion.It processes $5 trillion of payments a day for multinational corporations across 180 countries.
Fraser and other leaders highlighted their strategy for the services business at an investor day held at the bank's New York headquarters last month.
Operating expenses fell 2% to $13.4 billion, as the bank saved money from the reorganization that simplified its structure.
But the lower expenses were offset by the fines for failing to comply with regulatory punishments known as consent orders dating back to 2020, and investments for the remediation work.
Rival JPMorgan Chase JPM.N reported a rise in second quarter profit on Friday, while Wells Fargo's WFC.N net income declined and it missed estimates for interest income.
TURNAROUND IN FOCUS
Analysts have called 2024 a transitional year for Citi as it becomes leaner under Fraser's turnaround.
Investors have also cheered the efforts and rewarded Fraser with a 28% jump in the bank's stock this year, far outperforming closest rivals JPMorgan Chase JPM.N and Bank of America BAC.N, as well as the broader equity markets .SPX.
Still, Citi has recently faced regulatory challenges tied to its so-called living will, which details how it would be unwound in the event of bankruptcy.
Citi is also working through two 2020 consent orders, in which the U.S. Federal Reserve and the Office of the Comptroller of the Currency directed it to fix longstanding and widespread deficiencies in its risk management, data governance and internal controls.
Reporting by Tatiana Bautzer in New York and Manya Saini in Bengaluru; Editing by Lananh Nguyen and Shounak Dasgupta
면책조항: XM Group 회사는 체결 전용 서비스와 온라인 거래 플랫폼에 대한 접근을 제공하여, 개인이 웹사이트에서 또는 웹사이트를 통해 이용 가능한 콘텐츠를 보거나 사용할 수 있도록 허용합니다. 이에 대해 변경하거나 확장할 의도는 없습니다. 이러한 접근 및 사용에는 다음 사항이 항상 적용됩니다: (i) 이용 약관, (ii) 위험 경고, (iii) 완전 면책조항. 따라서, 이러한 콘텐츠는 일반적인 정보에 불과합니다. 특히, 온라인 거래 플랫폼의 콘텐츠는 금융 시장에서의 거래에 대한 권유나 제안이 아닙니다. 금융 시장에서의 거래는 자본에 상당한 위험을 수반합니다.
온라인 거래 플랫폼에 공개된 모든 자료는 교육/정보 목적으로만 제공되며, 금융, 투자세 또는 거래 조언 및 권고, 거래 가격 기록, 금융 상품 또는 원치 않는 금융 프로모션의 거래 제안 또는 권유를 포함하지 않으며, 포함해서도 안됩니다.
이 웹사이트에 포함된 모든 의견, 뉴스, 리서치, 분석, 가격, 기타 정보 또는 제3자 사이트에 대한 링크와 같이 XM이 준비하는 콘텐츠 뿐만 아니라, 제3자 콘텐츠는 일반 시장 논평으로서 "현재" 기준으로 제공되며, 투자 조언으로 여겨지지 않습니다. 모든 콘텐츠가 투자 리서치로 해석되는 경우, 투자 리서치의 독립성을 촉진하기 위해 고안된 법적 요건에 따라 콘텐츠가 의도되지 않았으며, 준비되지 않았다는 점을 인지하고 동의해야 합니다. 따라서, 관련 법률 및 규정에 따른 마케팅 커뮤니케이션이라고 간주됩니다. 여기에서 접근할 수 있는 앞서 언급한 정보에 대한 비독립 투자 리서치 및 위험 경고 알림을 읽고, 이해하시기 바랍니다.
