Jane Fraser speaks at the Milken Institute Global Conference in Beverly Hills, California, USA, on April 29, 2019.
Kyle Grillot | Bloomberg via Getty Images
Citigroup released results Thursday surpassing analyst estimates for its first quarter earnings with strong investment banking income and a larger-than-expected release of reserves for loan losses.
The company also said it was discontinuing retail banking operations in 13 countries in Asia and parts of Europe to focus more on asset management outside the US, one of CEO Jane Fraser’s first major strategic steps, who took it over in February.
The bank’s shares rose 3.1% in premarket trading.
The bank reported earnings of $ 7.94 billion, or $ 3.62 per share, more than the $ 2.60 estimate from analysts surveyed by Refinitiv. Sales of $ 19.3 billion exceeded the estimate of $ 18.8 billion.
Citigroup said it released $ 3.9 billion in credit losses in the quarter, resulting in a profit of $ 2.06 billion after $ 1.75 billion in credit losses in the period. Analysts had expected a provision of $ 393.4 million in the quarter.
Fraser, reporting first-quarter results at the helm of the country’s third-largest bank, wasted no time making changes to the company’s sprawling global operations. The bank is exiting consumer operations in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam.
The plan is to focus its non-US consumer banking activities on Singapore, Hong Kong, UAE and London – places of great concentration of wealth, Fraser said.
“As a result of the continuous renewal of our strategy, we have decided that we are going to double our wealth,” Fraser said in the release. The move to focus on the remaining markets “allows us to deliver the strong growth and attractive returns that the asset management business offers through these key hubs”.
Citigroup lacked the scale to compete properly in the 13 markets it exits, she said. Investment banking business will continue in markets where the company is exiting consumer business, the bank said.
Analysts will be happy to hear about Fraser’s ultimate vision for the bank, as well as details of its plan to appease regulators who have criticized the company’s risk management measures.
On Wednesday, JPMorgan Chase and Wells Fargo both released results that exceeded analyst expectations for reserves release and strong Wall Street earnings, while Goldman Sachs exceeded estimates for strong advisory and trading results. Earlier Thursday, Bank of America also reported it is exceeding estimates for similar reasons to its peers.
Citigroup shares are up 18% so far this year, compared to the 26% rise of the KBW Bank Index.
This is what Wall Street expected:
Earnings: $ 2.60 per share, up 147% year-on-year, according to Refinitiv.
Revenue: $ 18.8 billion, down 9.2% year-on-year.
This story evolves. Please check again for updates.
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