A surge in fixed-income trading revenue amid a roller coaster ride on Wall Street helped Citi turn a profit during a turbulent second quarter, despite credit losses and weakness in its consumer banking unit.
Citigroup on Tuesday (July 14) reported a 68 percent jump in fixed-income trading revenues for the quarter, which helped the New York financial services giant beat analyst estimates for both earnings and revenue.
The big increase in fixed-income trading revenue, combined with a rise as well in investment banking activity, pushed Citi’s revenue for the quarter 5 percent higher to $19.8 billion, up from $18.8 billion during the same period a year ago.
Citi’s Institutional Clients Group, which covers both fixed-income trading and investment banking, saw a 21 percent jump in revenue during the second quarter to $12.1 billion, up from $10 billion during the second quarter of 2019.
The big surge in trading revenue helped Citi post a profit of 50 cents a share for the quarter, beating analyst estimates of 28 cents a share and also beating analyst predictions of $19.1 billion in revenue for the quarter.
By contrast, Citi’s Global Consumer Banking division took a 10 percent hit in revenue, falling to $7.3 billion in the second quarter, down from $8.1 billion in the same period a year ago.
Net credit losses surged 12 percent to $2.2 billion for the quarter, with Citi reporting it had provided some form of relief or adjustment to 2 million credit card holders.
“While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well,” Citi CEO Michael Corbat said in a press statement. “The Institutional Clients Group had an exceptional quarter, marked by an increase in Fixed Income of 68%. Global Consumer Banking revenues were down as spending slowed significantly due to the pandemic.”