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Citigroup (C) earnings 1Q 2021

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Citigroup released results Thursday that exceeded analysts’ estimates for first-quarter earnings with strong investment banking revenues and a higher-than-expected release of loan loss provisions.

The company also said it closed retail banking in 13 countries in Asia and parts of Europe to focus more on wealth management outside of the US. This was one of the first major strategic moves for CEO Jane Fraser, who took over the business in February.

The bank’s shares fell less than 1% after rising 3.1% in the pre-market.

The bank reported earnings of $ 7.94 billion, or $ 3.62 per share, beating Refinitiv’s estimate of $ 2.60. Sales of $ 19.3 billion exceeded the estimate of $ 18.8 billion.

Citigroup announced it released $ 3.9 billion in credit risk reserves during the quarter, resulting in a profit of $ 2.06 billion after loan losses of $ 1.75 billion for the period. Analysts had expected a provision of $ 393.4 million for the quarter.

The bank generated record revenues from investment banking and stock trading, similar to previously reported competing firms. Citigroup’s stock trading revenue of $ 1.48 billion exceeded analysts’ estimate by more than $ 300 million, and fixed income trading revenue of $ 4.55 billion exceeded estimate by approximately $ 100 million.

Investment banking revenue rose 46% to $ 1.97 billion, roughly $ 300 million more than estimate, driven by high activity in subscribing stocks due to the boom in SPAC issuance.

Fraser, who heads the country’s third largest bank, reports first quarter results, wasted no time making changes to the company’s sprawling global operations. The bank exits consumer business in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.

According to Fraser, there are plans to focus non-US consumer banking in Singapore, Hong Kong, the United Arab Emirates and London – places with a high concentration of wealth.

“Because of the constant updating of our strategy, we have decided to double the wealth,” said Fraser in the press release. The focus on the remaining markets “enables us to capture the strong growth and attractive returns of the wealth management business through these key hubs.”

Citigroup lacked the scale to properly compete in the 13 markets it was leaving, she said. Investment banking will continue in markets where the company is exiting consumer business, the bank said.

Analysts will be eager to learn more about Fraser’s ultimate vision for the bank, as well as details of their plan to appease regulators who have criticized the company’s risk management controls.

On Wednesday, JPMorgan Chase and Wells Fargo released results that exceeded analysts’ expectations for the release of reserves and strong Wall Street earnings, while Goldman Sachs outperformed estimates of strong advisory and trading results. Bank of America also reported earlier Thursday that it had topped estimates for reasons similar to its counterparts.

Citigroup’s shares are up 18% so far this year, compared to the KBW Bank Index’s 26% increase.


Here’s what Wall Street expected:

Earnings: $ 2.60 per share, 147% higher than the same period last year, according to Refinitiv.

Revenue: $ 18.8 billion, down 9.2% from a year earlier.

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Robert Dunfee