Citigroup profit beats estimates as stock trading increases 23%

Citigroup beat Wall Street estimates for first-quarter profit on Tuesday as its traders reaped a windfall from volatile markets that fueled client activity.

The third-largest US lender’s earnings echoed those of Wall Street rivals, including JPMorgan Chase, Bank of America, and Morgan Stanley, whose results were also lifted by stronger equities trading. While industry profits rose, executives warned that US tariff policies cast a shadow over the economic outlook.

“We continue to help our clients navigate an uncertain environ7ment,” CEO Jane Fraser said in a statement. “When all is said and done, and long-standing trade imbalances and other structural shifts are behind us, the US will still be the world’s leading economy, and the dollar will remain the reserve currency.” Stock trading jumped in the first three months of the year, with 23% higher revenue, as investors rejigged their portfolios during a period of heightened uncertainty over President Donald Trump’s tariffs and the emergence of Chinese startup DeepSeek’s low-cost AI model.

Investment banking revenue increased 12%, mainly from advising on mergers and acquisitions.

“There’s obviously a great deal of uncertainty around tariffs and trade policy and how that will evolve, but also uncertainty around the broader agenda, deregulation, tax policy, etc. - that is putting kind of downward pressure on the outlook for growth,” Chief Financial Officer Mark Mason told reporters. “We hope the 90-day pause will allow some breathing room,” he said, referring to the Trump administration’s hold on tariffs against many trading partners.

Citi’s net income jumped 21% to $4.1 billion, or $1.96 per share, in the three months ended March 31. Wall Street had expected the bank to earn $1.85, according to estimates compiled by LSEG.

Shares of the New York-based bank rose 1.6%. They have declined 10.2% this year as of Monday’s close.

CEOs across Wall Street have warned about the potential fallout of the US tariffs, which have clouded the economic outlook and prompted recession fears. Bank stocks were pummeled when sweeping US tariffs were announced this month, a stark turnaround from the optimism at the start of the year for Trump’s pro-business agenda.

Tariffs could reignite inflation and constrain economic growth, curbing companies’ appetites for dealmaking and borrowing. Weakening consumer sentiment could also weigh on spending and loan demand.

“There’s obviously a great deal of uncertainty around tariffs and trade policy and how that will evolve, but also uncertainty around the broader agenda, deregulation, tax policy, etc. That is putting kind of downward pressure on the outlook for growth,” Mason told reporters on a call.

The bank increased its provisions for loan losses as the growth outlook worsened, but so far, borrowers’ delinquencies are within expectations, Mason added. Citi’s cost of credit was $2.72 billion in the quarter, compared with $2.37 billion a year earlier, as the bank increased its unemployment estimates.

The bank has improved its risk management and controls and reduced some of its extensive manual processes, Mason said. But he declined to set a target date for resolving its regulatory consent orders dating back to 2020, citing issues that take longer to fix, such as data integrity.

The bank cut bonuses paid in 2024 to top executives for not making enough progress on the compliance issues after it received additional fines last year. Mason said Citi will increase spending on addressing the regulatory orders and modernization from $3 billion spent in 2024.

Citi plans to slash its reliance on information technology contractors and hire thousands of employees for IT as it grapples with regulatory punishments, Reuters reported last month.

Preparations are still on track for an IPO of Citi’s Mexican unit, Banamex, by the end of the year, depending on market conditions, but regulatory considerations could push it into 2026, Mason said.

BANKING, WEALTH ARMS SHINE Two divisions recently revamped by the CEO showed improvement in the first quarter. Banking, led by former JPMorgan executive Viswas Raghavan, increased revenue by 12% to $2 billion.

The bank advised on several notable transactions during the quarter, including Johnson & Johnson’s $14.6-billion deal for neurological drug maker Intra-Cellular Therapies.

The wealth management unit run by former Bank of America executive Andy Sieg had record revenue of $2.1 billion, up 24% from a year earlier. The bank repurchased $1.75 billion of shares in the first quarter, higher than prior expectations of $1.5 billion.

Citi is targeting a similar level of share repurchases in the second quarter.

Caterpillar said on Tuesday that Chief Operating Officer Joe Creed would succeed Jim Umpleby as CEO, tapping an insider to help the construction equipment maker navigate the fallout of President Donald Trump’s sweeping tariffs.

Umpleby, a veteran who has been with the company for more than four decades, held the top job for the last eight years and guided the firm through a demand and supply chain downturn brought on by the COVID-19 pandemic.

Agencies