Citigroup's traders help Fraser get closer to profit target

Citigroup inched closer to a key profitability target in the first quarter as the firm's traders surpassed expectations and the bank drew a record haul from its wealth and retail businesses.

The trading division rode a wave of volatility in global markets to notch $6 billion in revenue for the period, helped by an 8% jump in fixed income and a 23% gain in equities trading. That topped the $5.74 billion average of analyst estimates compiled by Bloomberg.

The bank's wealth business, a key area of focus under Chief Executive Officer Jane Fraser, saw revenue jump 24% to a record $2.1 billion. The largest gain came from the bank's Wealth at Work division, which provides tailored advice to lawyers and professional-services firms.

Taken together, the results helped Citigroup lift its return on tangible common equity — a key measure of profitability — to 9.1% in the quarter. Fraser has set a target of reaching 10%-11% for that metric by the end of next year, bringing it more in line with its peers.

As part of that effort, she has reorganized the bank, hired leaders from outside the firm and cut thousands of roles. The company is also revamping its back office and controls to shed lingering regulatory penalties.

Firmwide net income rose 21% to $4.1 billion in the first three months of the year, or $1.96 a share. That was well above the $1.84 average of analyst estimates.

Still, the equities haul at Citigroup, which is trying to build out its prime-services offering, lagged increases of more than 40% at rivals JPMorgan Chase and Morgan Stanley.

And debt and equity underwriting revenue fell during the quarter as uncertainty surrounding President Donald Trump's trade policies chilled some deal activity. Trump's tariff policy has roiled markets and ignited fears that the U.S. could be plunged into a recession.

Despite that, the firm's investment bankers managed to notch a 12% gain in revenue to $2 billion, largely led by fees from mergers and acquisitions that closed during the quarter.

"When all is said and done, and long-standing trade imbalances and other structural shifts are behind us, the US will still be the world's leading economy, and the dollar will remain the reserve currency," Fraser said.

Earnings

No more Trump 'tailwind': Goldman now sees recession risk

April 14, 2025 2:55 PM

Growing provisions

Citigroup also set aside $2.7 billion for souring loans, a 15% increase from a year ago. That was bigger than the 9% jump analysts were expecting.

The firm's U.S. personal banking division posted record quarterly revenue of $5.2 billion. That was despite an 11% drop in revenue from its retail services unit, which offers co-brand and private label credit cards with firms like Home Depot and Best Buy.

Services, a giant money-moving operation that is the most profitable of the bank's five units, posted its best first-quarter revenue in 10 years.