Citigroup (C, Financial) shares rose by 2% following the release of its impressive Q1 earnings. The bank achieved its seventh consecutive double-digit EPS beat, with total revenue climbing 2.8% year-over-year to $21.60 billion. Record revenues were reported in US Personal Banking (USPB) and Wealth segments. Net interest income increased by 4%, driven by USPB, Markets, Wealth, and Services, although declines were noted in All Other and Banking. Citigroup reaffirmed its FY25 revenue guidance of $83.10-84.10 billion.
- Markets Segment: The largest segment, Markets, posted a 12% revenue increase to $6.0 billion, bolstered by growth in both Fixed Income and Equity markets. Fixed Income revenue rose 8% to $4.5 billion, while Equity markets revenue surged 23% to $1.5 billion, thanks to equity derivatives and increased market volatility.
- US Personal Banking (USPB): Revenue increased by 2% to $5.2 billion, driven by growth in Branded Cards and Retail Banking, though offset by declines in Retail Services. Net interest income rose 6% due to loan growth in Branded Cards and higher deposit spreads. Non-interest revenue fell 168% due to higher partner payment accruals in Retail Services.
- Wealth Segment: Despite being one of Citi's smaller segments, revenue jumped 24% to $2.1 billion. Growth was strong across Citigold, the Private Bank, and Wealth at Work. Net interest income increased 30% to $1.3 billion, driven by growth in deposit spreads.
- Services Segment: Revenue grew by 3% to $4.9 billion, driven by Treasury and Trade Solutions (TTS). The Banking segment saw a 12% increase in revenue to $2.0 billion, driven by Investment Banking growth and mark-to-market impacts on loan hedges, offset by a decline in Corporate Lending. The All Other segment saw a 39% revenue decline to $1.4 billion.
As the earnings season progresses, a trend of robust Q1 results is emerging among banks, albeit with caution due to macroeconomic concerns such as tariffs, inflation, and slowing growth. Citigroup did not express much caution, but its earnings call was scheduled for later, so further insights were awaited.
Citigroup's reaffirmation of its FY25 revenue guidance is a positive sign. CEO Jane Fraser expressed optimism about the US economy's future, stating that once trade imbalances and structural shifts are resolved, the US will continue to lead the global economy, with the dollar remaining the reserve currency, a reassuring statement amid concerns about foreign investors selling Treasuries.
