Published: Fri, July 14, 2017
Hi-Tech | By Ellis Neal

Citigroup Inc (C) Q2 Earnings Beat, Despite Higher Costs

Citigroup Inc (C) Q2 Earnings Beat, Despite Higher Costs

Citigroup suffered a drop in revenues from both equities and fixed income trading in the second quarter, but a record performance in investment banking helped offset the fall.

Overall net income of $3.9 billion fell 3% year-over-year, however, hurt by higher cost of credit and operating expenses, along with a larger effective tax rate. The results still beat analysts' forecasts of $1.21 a share, according to FactSet. Analysts had anticipated $17.367 billion. This came on the back of low volatility and higher trading activity around Brexit a year earlier.

However, the drop-off wasn't almost as sharp as anticipated, or as sharp as J.P. Morgan's.

Trading revenue fell 5% from a year earlier to $4.39 billion. Last month, Chief Financial Officer John Gerspach predicted trading revenue would be down by 12% to 13% from a year ago.

Citigroup Inc shares rose $0.34 (+0.51%) in premarket trading Friday.

At the same time, Citi had to write off more bad loans in the quarter, mostly in credit cards.

All of the other businesses in the division - bar the trading operations - posted higher revenues versus a year ago.

The net income helped generate additional regulatory capital, lifting the common equity tier 1 (CET1) capital ratio to 13.0% from 12.8% the first quarter, well above the 11.5% Corbat believes is needed to prudently operate the firm. Citi's institutional clients group earned $2.76 billion, up 6 percent from a year earlier.

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