Citigroup (C, Financial) has recently unveiled its first-quarter earnings, showcasing a slight improvement over the previous quarter's performance. Despite the challenges, the company managed to surpass analysts' expectations in both earnings and revenue, marking a considerable achievement since undertaking significant organizational changes. These changes included a major reduction in workforce and the divestment of certain business segments, aiming to streamline operations and cut costs.
Key highlights from Citigroup's first-quarter earnings report include:
- The company has beaten earnings estimates for three consecutive quarters, with a Q1 EPS of $1.58, despite a year-over-year decline in earnings over the past two quarters.
- Revenue dipped by 1.6% year-over-year to $21.10 billion in Q1, affected by divestitures such as the sale of its India consumer business. Adjusting for these impacts, revenue would have seen a 3% increase, supported by growth in Banking, U.S. Personal Banking (USPB), and Services.
- The Banking division reported a 49% increase in revenue, driven by a 35% rise in Investment Banking due to improved market sentiment. USPB and Services also saw significant growth, with revenues up by 10% and 8%, respectively.
- Contrasting these positive results, the Markets and Wealth divisions experienced declines of 7% and 4%, respectively, continuing the trend from the previous quarter. This was attributed to weaker performance in fixed income and higher mortgage funding costs.
- For FY24, Citigroup maintains its revenue forecast at $80-81 billion and expenses at $53.5-53.8 billion, excluding the FDIC special assessment. Its medium-term goals remain unchanged, targeting 4-5% annualized revenue growth and an 11-12% return on tangible equity.
Despite the optimistic results, Citigroup's stock response was tepid, as the market had already anticipated the outcomes of the company's restructuring efforts. With the stock price having increased significantly since October, the latest financial report, while solid, was largely expected. The mixed performance across its various divisions, similar to the previous quarter, suggests that Citigroup's stock may not experience significant movement in the immediate future, especially given the current uncertain economic landscape.
