(Bloomberg) - Citigroup Inc., the third-biggest U.S. bank, said first-quarter profit rose 30 percent as revenue from fixed-income trading and investment banking exceeded analysts estimates.
Net income was $3.81 billion, or $1.23 a share, compared with $2.93 billion, or 95 cents, in the same period last year, the New York-based lender said today in a statement. Profit was $1.29 a share excluding an accounting adjustment. The average estimate of 23 analysts surveyed by Bloomberg was $1.17 a share in adjusted earnings.
Chief Executive Officer Michael Corbat, 52, who oversaw his first full quarter since replacing Vikram Pandit in October, is firing workers and closing branches as he seeks to make Citigroup more efficient. Bond-trading and investment-banking revenue was aided by a decline in reserves for loan losses, which bolstered earnings.
It is critical that Citi be viewed as an indisputably strong and stable institution and we made progress towards that goal, Corbat said in the statement. The environment remains challenging and we are sure to be tested as we go through the year.
Revenue increased to $20.5 billion from $19.4 billion in the same quarter last year. Excluding accounting adjustments, revenue was $20.8 billion. The average estimate of 16 analysts surveyed by Bloomberg News was $20.2 billion.
Revenue from trading bonds declined 3% to $4.6 billion, excluding adjustments, from the same period last year, Citigroup said. David Trone, an analyst with JMP Securities LLC, had estimated $3.2 billion. Moshe Orenbuch, a Credit Suisse Group AG analyst, predicted $4.2 billion.
The bank cited growth in securitized products for the performance in fixed-income trading. The unit, run by Jeffrey Perlowitz and Mark Tsesarsky, deals in products such as mortgage-backed securities.
Investment banking, which includes advising clients on mergers and acquisitions and helping them sell shares and bonds to the public, posted revenue of $1.1 billion. Richard Staite, an analyst in London with Atlantic Equities LLP, had estimated revenue of $920 million.
Citigroups underwriting unit, run by Tyler Dickson, benefited as investors bought more junk bonds and shares through public offerings. The bank helped clients sell $12.3 billion of junk bonds in the quarter, compared with $10.6 billion a year earlier, according to data compiled by Bloomberg.
The firm underwrote $14.2 billion of global share sales, 23 percent more than the same quarter in 2012, the data show.
Corbat oversaw a so-called loan loss reserve release of $652 million, allowing the bank to boost profit with funds that had been designated to cover future losses on bad loans. Trone had expected a $420 million release while Staite had predicted $175 million.
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access