Citigroup Inc. (C, Financial) posted its first-quarter 2021 financial results before the market opened on April 15. The company recorded an earnings and revenue beat for the quarter, helped by a rise in trading revenue, which was only partly negated by declining interest income in the consumer banking business. Additionally, a higher-than-anticipated release of loan-loss reserves boosted quarterly profits.
Shares surged 3% to $75 in premarket trading following the news.
Performance at a glance
The New York-based bank reported net income of $7.9 billion, which reflected a mammoth growth of 213% over the prior-year quarter. Adjusted earnings were $3.62 per share versus the $2.60 that analysts expected. Quarterly revenue came in at $19.3 billion, which exceeded the $18.8 billion estimate.
The company's operating expenses surged 4% to $11.1 billion, driven by investments in infrastructure and higher coronavirus-related expenses. This was partly negated by efficiency savings as well as lower marketing and other discretionary spending. Credit costs amounted to $2.1 billion, down from $7 billion the year before, reflecting the release of $3.9 billion in previously-booked reserves for credit losses.
Net credit losses of $1.75 billion dropped 15% on a year-over-year basis. At quarter-end, the company's allowance for credit losses on loans stood at $21.6 billion, or 3.29% of total loans. That compares with $20.4 billion, or 2.84% of total loans, reported last year.
In a statement, CEO Jane Fraser, commented on the bank's performance:
"Our capital levels remained strong and stable, allowing us to respond to the needs of our clients and return capital to our shareholders. At 11.7%, our Common Equity Tier One Ratio was unchanged from the fourth quarter and we resumed the repurchase of common stock, which we had voluntarily paused at the onset of the pandemic."
Segment details
Global consumer banking revenue declined 14% to $7 billion on lower loan volumes, reflecting lower consumer spending. This was partly offset by robust deposit growth.
Likewise, sales for the institutional clients group segment dipped 2% to $12.2 billion as lower revenue in the treasury and trade solutions, investment banking and corporate lending divisions more than offset a rise in fixed income and equity market revenue.
Within the segment, markets and securities revenue inched up 2% to $6.7 billion, despite a 5% decrease in fixed-income trading revenue. Equity market revenue surged 26% to $1.5 billion thanks to a strong performance in cash equities, derivatives and prime finance.
Corporate revenue was down 4% to $70 million.
Disclosure: I do not hold any positions in the stocks mentioned.
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