Citigroup Inc., the third-biggest U.S. bank, rose in New York trading after first-quarter profit and revenue from fixed-income trading and investment banking exceeded analysts’ estimates.
The shares climbed 2.7% to $45.97 at 10:33 a.m. in New York, the biggest gain on the 24-company KBW Bank Index. Net income jumped 30% to $3.81 billion and per-share profit excluding an accounting adjustment was $1.29, beating the $1.17 average estimate of analysts in a Bloomberg survey.
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.
“You can’t say it wasn’t a good quarter,” said Charles Peabody, an analyst at Portales Partners LLC in New York. Peabody cited revenue gains, the release of loan-loss reserves and the use of deferred tax assets to trim the New York-based bank’s tax bill. “Those three things are what people are focused on in a positive way.”
Revenue climbed to $20.5 billion from $19.4 billion in the same quarter last year and was $20.8 billion excluding accounting adjustments. The average estimate of analysts in a Bloomberg survey was $20.2 billion. Expenses rose 1% to $12.4 billion, “mainly reflecting an increase in legal and related costs and repositioning charges,” the bank said.
JPMorgan Chase & Co., the biggest U.S. bank, last week reported a 33% jump in first-quarter net income to $6.53 billion. Wells Fargo & Co., the fourth-biggest, said profit rose 22% to $5.17 billion. Both lenders used expense cuts to boost their earnings as revenue fell.
The division that contains Citigroup’s trading and investment-banking units, overseen by Co-President Jamie Forese, reported a $2.31 billion profit, compared with $1.28 billion a year earlier.
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 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. Revenue from rates trading and currencies declined, the bank said.