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Citigroup Q1 earnings benefit from strong trading revenues, beat estimates

Global investment banking firm Citigroup Inc. (C) reported better-than-expected earnings for the first quarter of 2018, helped mainly by a marked gain in equity trading revenues and lower effective tax rate. The stock gained modestly after the announcement.

First quarter profit increased 24% year-over-year to $1.68 per share, surpassing analysts’ forecast. At $18.9 billion, revenues were higher by 3% compared to last year and slightly above expectations.

Revenues of the Institutional Clients Group advanced 6% to $9.8 billion and those of Global Consumer Banking moved up 7% to $8.4 billion, mainly reflecting the general upturn in loan growth globally. Meanwhile, higher expenses and cost of credit partially offset the top-line performance. Continuing the recent trend, Corporate and Other revenues fell 51% during the quarter.

Citigroup Q1 2018 Earnings

Driving the overall growth, equity trading revenues surged 38%, more-than-offsetting a 7% decrease in fixed-income trading.

The Asia and EMEA operations of the New York-based company continued to perform well, and recorded double-digit revenue growth in the first quarter. North American revenues declined modestly amid the volatile market conditions and trade war concerns.

“We grew revenue across both our institutional and consumer businesses and delivered solid, client-led revenue gains in areas we have been investing in such as Citibanamex, TTS, Equities and the Private Bank,” said Citigroup CEO Michael Corbat.

Driving the overall growth, equity trading revenues surged 38%, more than offsetting a 7% decrease in fixed-income trading.

The multinational investment bank returned $3 billion in capital to stockholders during the three-month period. The company also reaffirmed its commitment of returning about $60 billion to shareholders over the three-year period ending 2019.

The first quarter being a seasonally favorable period for investment banks typically, JP Morgan Chase (JPM) today said its earnings surged 44% to an all-time high of $2.37 per share, exceeding expectations. Meanwhile, San Francisco, California-based Wells Fargo (WFC) reported a 9% growth in first quarter earnings to $1.12 per share, helped by strong revenue growth.

Shares of Citi, which lost around 3% so far this year, closed the last trading session up 3.2%. The stock gained further in the pre-market today following the earnings announcement.

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