By Tatiana Bautzer and Manya Saini
NEW YORK (Reuters) -Citigroup’s quarterly profit beat Wall Street estimates on Tuesday, as its traders brought in a windfall from turbulent markets and investment bankers gained from resilient dealmaking.
Stocks and bonds have whipsawed since April, when U.S. President Donald Trump stunned markets by announcing sweeping tariffs against major trading partners. Volatility tends to help Wall Street trading desks as clients rush to adjust their portfolios.
“We reported another very good quarter and continue to demonstrate that our strong results are sustainable through different environments,” CEO Jane Fraser said in a statement. “We continue to be at the center of some of the most significant transactions.”
Shares in the bank were last up nearly 1% in volatile premarket trading after the results.
The third-largest U.S. lender’s net income was $4 billion, or $1.96 per share, in the three months ended June 30. Total net income rose 25% from a year earlier.
Analysts on average had expected $1.60 per share, according to estimates compiled by LSEG.
Markets revenue jumped 16% to $5.9 billion, its best performance since the second quarter of 2020.
Investment banking remained subdued for most of the quarter, as economic uncertainty and choppy markets made companies hesitant to pursue deals.
But a rebound in June, marked by a string of large IPOs and multi-billion-dollar buyouts, has fueled optimism for the second half.
Citi’s investment banking fees climbed 13% in the second quarter, while overall banking revenue increased nearly 19% to $1.9 billion.
Citi jointly led the $1.05 billion IPO of stablecoin issuer Circle and the $650 million listing of retail trading platform eToro. The bank also advised Charter Communications on its $21.9 billion deal to buy privately held Cox Communications in May.
Equity capital markets fees climbed 25% in the quarter driven by strength in convertibles and IPOs, while advisory fees surged 52%.
Earlier on Tuesday, rivals JPMorgan Chase and Wells Fargo both beat Wall Street estimates for second-quarter profit.
Citi’s revenue rose 8% in the quarter from a year earlier to $21.7 billion, notching second-quarter records for its services, wealth and U.S. personal banking businesses.
Financial industry executives have cited resilient IPO and deal pipelines as indicators that activity will pick up in the second half amid easing economic uncertainty.
Meanwhile, revenue in the wealth unit jumped 20%. Citi executives have said that the business is a key growth area.
U.S. personal banking revenues climbed 6% in the second quarter, driven by higher interest-earning balances in credit cards.
Citi’s Wall Street businesses have gained in recent quarters after Fraser led a sweeping overhaul to boost profits. The banking division has also strengthened under Viswas Raghavan, who was hired from JPMorgan a year ago.
Still, the lender is working to address regulatory orders to fix longstanding deficiencies in its risk management, controls and data governance.
As part of those efforts, Citi retired 211 applications in the first half of the year, it said in a presentation. It also enhanced controls in 85 countries to detect “large, anomalous payments.”
The bank was hit by regulatory punishments known as consent orders in 2020 after it erroneously sent $900 million to Revlon lenders.
The compliance issues have weighed on Citi’s stock, which continues to trade at a steep discount to its Wall Street peers, still below its book value.
Citi has narrowed the gap by growing its price-to-book ratio over the past year. It has 17 buy recommendations and five hold recommendations from analysts, according to data compiled by LSEG.
Citi shares have risen 24.3% in the year to date, compared with a 6.6% gain in the S&P 500 through Monday.
(Reporting by Tatiana Bautzer in New York and Manya Saini in Bengaluru, editing by Lananh Nguyen and Sriraj Kalluvila)
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