Shares of Citigroup Inc. (NYSE: C) climbed 1.1% in premarket trading on Friday following the release of the company’s second-quarter results. Despite a decline in net income, the bank managed to beat expectations thanks to solid growth in personal banking and services.
Strong Performance in Personal Banking and Wealth Management
Citigroup reported a net income of $2.92 billion, or $1.33 per share, for the second quarter, compared to $4.55 billion, or $2.19 per share, in the same period last year. Although the figures represent a decline, they surpassed the FactSet consensus estimate of $1.31 per share.
While total revenue dipped 1.0% to $19.44 billion, it still exceeded the FactSet consensus estimate of $19.34 billion. The standout performer was the personal banking and wealth management division, which achieved an impressive 6.1% increase in revenue, reaching $6.40 billion.
Challenges in Institutional Clients Group
However, the institutional clients group division faced some challenges during the second quarter. Its revenue declined by 8.6% to $10.44 billion. Within this division, markets revenue witnessed a significant drop of 12.7% to $4.62 billion.
Further breakdown reveals that fixed income revenue experienced a decrease of 13.5% to $3.53 billion, while equity revenue fell by 10.2% to $1.09 billion. These results reflect the impact of market weakness on Citigroup’s institutional clients group.
Rising Cost of Credit
Additionally, the bank reported a notable increase of 43.2% in the cost of credit, which amounted to $1.82 billion for the second quarter.
Stock Performance
Despite these challenges, Citigroup’s stock has only declined by 3.8% over the past three months. Comparatively, the Financial Select Sector SPDR exchange-traded fund (NYSEARCA: XLF) has gained 4.9%, and the broader market represented by the S&P 500 index (NYSEARCA: SPY) has advanced by 9.0% during the same period.
In conclusion, Citigroup Inc.’s second-quarter results showcased the bank’s ability to overcome market weakness through growth in personal banking and services. While facing headwinds in the institutional clients group, Citigroup’s stock performance remains resilient in the face of broader market turbulence.
