Citigroup Inc. (C) posted its biggest quarterly profit since the financial crisis after a cost-cutting push helped the third-largest U.S. bank weather a slump in trading.
First-quarter net income jumped 21 percent to $4.77 billion, or $1.51 a share, the firm said Thursday in a statement, the most since the second quarter of 2007. Excluding accounting adjustments, earnings per share were $1.52, surpassing the $1.39 average estimate of 27 analysts surveyed by Bloomberg.
Chief Executive Officer Michael Corbat is focusing on targets for curbing costs and boosting returns after winning Federal Reserve approval to increase capital payouts to shareholders. In the fourth quarter, he sought to put much of the bank’s expenses from probes, severance and office closures in the past by setting aside more than $3.5 billion. Chief Financial Officer John Gerspach has said the move would resolve a “significant portion” of the firm’s legal burden.
Citigroup rose 1.8 percent to $54.16 at 10:19 a.m. in New York. The shares declined 1.7 percent this year through Wednesday, compared with a 1.3 percent decline in the Standard & Poor’s 500 Financials Index.
First-quarter expenses dropped 10 percent to $10.9 billion. Legal and repositioning costs accounted for $403 million of that, down 65 percent from a year earlier.
The lender is still contending with investigations into money-laundering controls and rigging of interest-rate and currency benchmarks. Its main banking subsidiary is under pressure to plead guilty to a felony in the foreign-exchange probe, two people briefed on the matter said this month.
Total revenue excluding accounting adjustments fell 1.9 percent to $19.8 billion, in line with analysts’ estimates.
Revenue from bond and equity trading, overseen by Paco Ybarra, dropped 9.5 percent to $4.36 billion. Gerspach had predicted March 2 that it would fall by as much as a “high single-digit” percentage. The New York-based bank incurred more than $150 million in losses on the Swiss franc’s surge in January, a person briefed on the matter said at the time.
Fixed-income, currencies and commodities trading revenue, excluding some accounting adjustments, slumped 11 percent from a year earlier to $3.48 billion, missing the $3.64 billion estimate of five analysts surveyed by Bloomberg. At JPMorgan Chase & Co., the nation’s largest bank, revenue from that business rose 4.5 percent to $4.07 billion. At Bank of America Corp., it fell 7 percent to $2.75 billion.