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BUSINESS NEWS APRIL 15, 2019 / 8:14 AM / UPDATED A DAY AGO

Citigroup profit beats oninvestment banking boost

Imani Moise, Siddharth Cavale 4 M I N R E A D

(Reuters) - Citigroup Inc reported higher-than-expected earningson Monday despite declining revenue as the New York-basedlender cut costs, grew its investment-banking business andexpanded net-interest margin.

Still, Citi improved its results in ways, including expense cutting,that may be tough to replicate in future quarters. A lower tax rate

FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking andfinancial conference in Toronto, Ontario, Canada, Oct. 19, 2017.REUTERS/Chris Helgren/File Photo

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also played a big role in Citi’s improvement from a year ago.

The bank’s income from continuing operations declined slightly.On a call with reporters, Chief Financial Officer Mark Mason saidthe decline was due in part to a divestiture last year. But netincome rose because the bank’s effective tax rate declined to 21percent from 24 percent a year earlier.

Citi has been investing in digital capability to try to win depositsdomestically despite its light U.S. branch network. Chief ExecutiveMike Corbat said in a statement its efforts are showing positiveearly results.

But the bank is still growing deposits faster abroad than in theUnited States: International consumer deposits rose 3 percentduring the quarter, while retail North American deposits edged up1 percent.

JPMorgan Chase & Co on Friday reported that its U.S. consumerdeposits were up 3 percent from a year earlier.

Corbat also pointed to the bank’s improved 11.9-percent return onaverage tangible common shareholder’s equity and the $5.1 billionit returned in capital to shareholders during the quarter.

“Both our consumer and institutional businesses performed welland we saw good momentum in those areas where we have beeninvesting,” he said.

Investment banking revenue rose 20 percent to $1.4 billion, asstrong growth in advisory and investment-grade debt underwritingmore than offset a drop in equity underwriting.

Bond trading rose 1 percent in sharp contrast to Goldman Sachsand JPMorgan, both of which reported double-digit declines.

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But a 24-percent drop in equities trading pressured Citi’s overallrevenue, which fell 2 percent to $18.58 billion, slightly belowanalysts’ estimates.

Revenue from consumer banking, the bank’s largest business, wasflat at $8.5 billion, due to weakness in Asia.

North American branded cards revenue jumped 5 percent duringthe quarter, including the impact of a one-time gain the yearbefore.

In 2018, Citigroup ranked third in the United States foroutstanding credit-card loans, with an 11.4 percent market share,behind first-place JPMorgan Chase and second-place AmericanExpress, according to The Nilson Report.

Earlier this year, the bank said it would earn $2 billion more inrevenue from lending activities than it did in 2018.

Total loans at the third-largest U.S. bank by assets rose 3 percentto $682.3 billion, while deposits grew 5 percent to $1.03 trillion,excluding foreign exchange fluctuations.

Citi’s net-interest margin, a closely watchedmetric, expanded 8 basis points to 2.72 percentin the quarter. Total operating expenses fell 3percent to $10.58 billion

Leading into the reporting season someanalysts feared that net interest margin wouldpeak since the Federal Reserve signaled it

would not raise interest rates this year. On a call with analysts,Mason said that a rate cut or the absence of a rate hike would nothave a material impact on results for the year.

Net income rose to $4.71 billion, or $1.87 per share, for the firstquarter ended March 31 from $4.62 billion, or $1.68 per share, ayear earlier.

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FILE PHOTO: Michael Corbat, CE…

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Banca Monte dei Paschi di Siena is considered theworld's oldest surviving bank. It was founded inItaly as a pawnshop in 1472.

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Analysts were looking for a profit of $1.80 per share, according toIBES data from Refinitiv.

Reporting by Imani Moise in New York and Sidharth Cavale in Bengaluru; Editing by

Nick Zieminski and Phil Berlowitz

Our Standards: The Thomson Reuters Trust Principles.

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