Citigroup Q1 Profits Surge 21% on Trading, Wealth Management Gains

Citigroup has taken a significant step towards its profitability target for the first quarter, driven by strong performance in its trading division and record revenues in wealth management and retail banking. The trading division capitalized on global market volatility, generating $60 billion in revenue, surpassing analyst estimates of $57.4 billion. This growth was fueled by an 8% increase in fixed income business and a 23% surge in equity trading.

The bank's wealth management business, a key focus area under CEO Jane Fraser, saw a 24% increase in revenue, reaching a record $21 billion. The primary contributor to this growth was the Wealth at Work division, which provides customized advice to lawyers and professional service firms.

Overall, these strong performances helped Citigroup raise its return on tangible common equity (ROTCE), a crucial measure of profitability, to 9.1% for the quarter. Fraser aims to increase this metric to between 10% and 11% by the end of next year, aligning the bank more closely with its peers. As part of this effort, Fraser has restructured the bank, hiring new leadership from outside the company and reducing thousands of jobs. The bank is also reforming its back-office and control systems to avoid regulatory penalties.

For the first three months of the year, the company's net income grew by 21% to $41 billion, or $1.96 per share, significantly exceeding the average analyst estimate of $1.84 per share. Fixed income trading revenue reached $45 billion, and equity trading revenue hit $15 billion, both exceeding expectations. However, Citigroup's equity trading performance lagged behind competitors like JPMorgan Chase and Morgan Stanley, which saw increases of over 40%.

Debt and equity underwriting revenues declined due to uncertainty surrounding Donald Trump's trade policies, which cooled some trading activities. The comprehensive trade war initiated by the former U.S. president disrupted markets and raised concerns about a potential U.S. recession. Despite these challenges, the company's investment banking revenues grew by 12%, driven by fees from completed mergers and acquisitions during the quarter.