Citigroup Q1 Profit Beats View, But Revenues Miss

Citigroup Inc. (C) on Monday reported a 2 percent increase in profit for the first-quarter, driven by a reduction in expenses and a lower effective tax rate, partially offset by the lower revenues and higher cost of credit. But, revenues decreased 2% from the prior-year period.

Quarterly earnings per share beat analysts’ estimates, while revenues missed their expectations.

Citi Chief Executive officer Michael Corbat said, “…. Both our consumer and institutional businesses performed well and we saw good momentum in those areas where we have been investing, such as U.S. Branded Cards, Treasury and Trade Solutions, and Investment Banking.”

Citigroup net income for the first-quarter rose 2 percent to $4.71 billion from $4.62 billion last year. While, earnings per share improved 11 percent to $1.87 from the prior year’s $1.68 primarily driven by a 9 percent reduction in average diluted shares outstanding as well as the growth in net income. Analysts polled by Thomson Reuters expected the company to report earnings of $1.80 per share for the quarter. Analysts’ estimates typically exclude special items.

However, total revenues for the quarter decreased 2 percent to $18.58 billion from last year’s $18.87 billion, reflecting the lower revenues in Equity Markets as well as mark-to-market losses on loan hedges in Institutional Clients Group and the continued wind-down of legacy assets in Corporate / Other. Analysts expected revenue of $18.63 billion for the quarter.

Revenues for the quarter decreased 2% from the prior-year period, including the impact of a $150 million gain on the sale of the Hilton portfolio in North America Global Consumer Banking in the prior-year period. Excluding gain, revenues decreased 1% from the prior-year period largely driven by lower revenues in Equity Markets as well as mark-to-market losses on loan hedges, both in the Institutional Clients Group, and the continued wind-down of legacy assets in Corporate / Other.

Global Consumer Banking revenues of $8.5 billion remained largely unchanged on a reported basis. In constant dollars, revenues increased 4 percent, excluding the gain on the sale of the Hilton portfolio in the prior-year period, driven by growth in all three regions.

Institutional Clients Group revenues of $9.7 billion decreased 2 percent, as growth in Banking was more than offset by a decline in Markets and Securities Services.

Corporate / Other revenues of $431 million decreased 27 percent, primarily driven by the wind-down of legacy assets.

In the pre-Market trade, C is trading at $67.52, up $0.10 or 0.15 percent.

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