By Sweta Singh and David Henry
(Reuters) – Citigroup Inc’s (C.N) quarterly profit plunged 27 percent as it earned less from trading and investment banking and incurred higher costs related to shrinking some of its businesses.
The profit decline is the biggest among big U.S. banks that have reported first-quarter results so far, but lower operating expenses helped Citigroup beat Wall Street’s low expectations.
Shares of the No.4 U.S. bank by assets were up more than 2 percent at $ 46.15 in premarket trading on Friday.
Banks globally have had a tough start to the year amid near-zero interest rates and a slowdown in China. Adding to the pain for banks are loans to energy companies as a slump in oil prices drives many oil and gas producers to the brink of bankruptcy.
Investment banking fees across the industry fell 29 percent in the period, the slowest first-quarter since 2009, according to Reuters data.
“While our market-sensitive products clearly suffered from weak investor sentiment during the quarter, we continued to make progress in several key areas,” Chief Executive Michael Corbat said in a statement.
Revenue from fixed income markets fell 11.5 percent to $ 3.09 billion in the first quarter, while investment banking revenue slumped 27.2 percent to $ 875 million. However, operating expenses declined 3.3 percent to $ 10.5 billion.
Citigroup, like its rivals, has resorted to aggressive cost controls to underpin earnings over the past several quarters as revenue remains weak.
The bank, which has more assets in emerging markets than other U.S. banks, has been exiting less-profitable markets and cutting jobs to become more efficient. The company recorded $ 491 million in so-called “repositioning” charges.
Citigroup’s better-than-expected results come two days after it won a huge endorsement from regulators, who said the bank was the only one of eight reviewed to have a credible plan to deal with a potential bankruptcy without relying on public money.
The endorsement gives investors reason to believe that Citigroup will win approval in June from the U.S. Federal Reserve to return more money to shareholders.
Citigroup’s net income fell to $ 3.5 billion, or $ 1.10 per share, in the quarter ended March 31, beating the average analyst estimate of $ 1.03 per share, according to Thomson Reuters I/B/E/S.
Revenue fell 11 percent to $ 17.56 billion, but topped the average estimate of $ 17.48 billion.
(Reporting by Sweta Singh in Bengaluru; Editing by Kirti Pandey)
