Citigroup said profit for the first quarter climbed 42% as spikes in market volatility and robust dealmaking supported higher trading revenue and investment banking fees.
For the three months ended March 31, the bank reported net income of $5.8 billion, or $3.06 per share, compared with $4.1 billion, or $1.96 per share, a year earlier. The results were announced on Tuesday.
Market activity linked to rising geopolitical tensions in the Middle East contributed to the boost in trading. Analysts at the bank pointed to the U.S.-Israeli war on Iran escalating regional tensions and disrupting oil shipments through the Strait of Hormuz. Those developments, together with investor concern over AI-driven disruption that led to a sell-off in software stocks, prompted clients to rebalance portfolios and created sharp price swings that lifted trading volumes.
Citi said total markets revenue increased 19% from a year earlier to $7.2 billion as a result of that heightened volatility. Equities trading revenue climbed 39% year-on-year. Fixed income trading was up 13%, while rates and currencies revenue rose 6%. Other fixed income revenue increased 27%, with commodities singled out as a strong contributor.
The bank also benefited from active investment banking. Revenues in the banking division rose 15% in the quarter, driven by a 64% increase in equity underwriting fees and a 19% rise in M&A advisory fees. Fees from fixed income underwriting were down 6%. Citi said that while prolonged geopolitical uncertainty did not significantly disrupt transactions in the first quarter, it could weigh on dealmaking and slow momentum going forward.
Citigroup reported $24.6 billion in revenue for the quarter, its highest quarterly total in a decade. The bank posted a 13.1% return on tangible common equity for the period, topping its internal profitability goal for the quarter; Citi is targeting a 10% to 11% return for the full year.
The results arrived amid a broader slate of bank earnings. Goldman Sachs (GS) opened the U.S. banking earnings season on Monday with stronger-than-expected quarterly profit tied to dealmaking and equities trading. JPMorgan Chase (JPM) and Wells Fargo (WFC) also beat first-quarter profit estimates on Tuesday. Bank of America (BAC) and Morgan Stanley (MS) were scheduled to report on Wednesday, April 15.
Net interest income, the spread between loan revenue and deposit costs, rose 12% in the quarter. Citi's wealth management and retail banking division saw 11% revenue growth on an adjusted basis that accounts for asset transfers completed during the past 12 months. That division registered the lowest return within the bank at 10.8% on tangible common equity.
Investor confidence in Citigroup’s turnaround under CEO Jane Fraser has been reflected in the stock performance: shares have climbed 104.9% over the past 12 months, outpacing peers and the KBW bank index, though the bank's valuation still trails some competitors.
Context and implications
The quarter illustrates how episodic shocks to global markets - from geopolitical clashes affecting energy flows to sector-specific sell-offs related to technology - can quickly reshape trading revenues across multiple asset classes. For Citigroup, those episodic forces paired with sustained deal flow in equity markets to lift both trading and underwriting results, producing Citi's highest quarterly revenue in ten years and a stronger-than-expected return on tangible equity for the period.
Detailed results at a glance
- Net income: $5.8 billion, or $3.06 per share, for Q1 versus $4.1 billion, or $1.96, a year earlier.
- Total revenue: $24.6 billion, the highest quarterly level in a decade.
- Total markets revenue: $7.2 billion, up 19% year-on-year.
- Equities trading revenue: +39% year-on-year.
- Fixed income trading revenue: +13% year-on-year.
- Rates & currencies revenue: +6% year-on-year.
- Other fixed income (including commodities): +27% year-on-year.
- Banking division revenue: +15% for the quarter; equity underwriting fees +64%; M&A advisory fees +19%; fixed income underwriting fees -6%.
- Net interest income: +12%.
- Wealth & retail revenue (adjusted): +11%; division ROTCE: 10.8%.
- Quarterly ROTCE: 13.1%; full-year target: 10% to 11%.
- Shares up 104.9% over the past 12 months.