Citigroup saw profit surge as tariff volatility supercharged trading revenue

Citigroup $C posted a 42% jump in first-quarter profit, with earnings of $3.06 per share beating analyst estimates of $2.65 per share, the bank reported Tuesday. Revenue of $24.63 billion — the bank's highest quarterly figure in a decade — also topped Wall Street expectations of $23.55 billion.

Geopolitical tensions that stoked volatility across asset classes helped push total markets revenue up 19% year-over-year to $7.2 billion, Reuters reported. Equities brought in $2.1 billion, a 39% year-over-year gain, while the fixed income desk generated $5.2 billion, up 13%. Prime balances in the markets division climbed more than 50%, Citigroup said.

Commodities drove a 27% increase in other fixed income categories, while rates and currencies contributed a 6% gain. Equity markets growth reflected strength across derivatives, prime services, and cash equities.

Investment banking revenue for the banking division rose 15% in the quarter. On the underwriting side, equity fees surged 64% and M&A advisory fees added 19%, though fixed income underwriting slipped 6%. The services division posted a 17% revenue increase to $6.1 billion.

Citigroup's return on tangible common equity came in at 13.1%, above the bank's full-year target range of 10% to 11% and the highest since 2021. "We remain very much on track to deliver the 10-11% RoTCE target this year," CEO Jane Fraser said in a statement.

Fraser also said the bank repurchased $6.3 billion in stock during the quarter and added: "We've entered into the final phase of our divestitures and 90% of our transformation programs are now at or near our target state."

A 7% increase in expenses reflected the cost of ongoing headcount reductions, with compensation, benefits, and severance payments all weighing on the bottom line as Citigroup pressed ahead with its restructuring. At $2.81 billion, the provision for credit losses exceeded the $2.64 billion analyst forecast, with consumer card net credit losses and a $579 million allowance build both contributing to the shortfall.

Over the past year, Citigroup shares have gained roughly 104.9%, a run that has left both the KBW bank index and most large-bank peers behind, according to Reuters.