Citigroup has today posted a smaller than expected 27% drop in quarterly profit as the third-largest US bank's trading desk cashed in on increased market volatility, cushioning a slump in investment banking.
Revenue at the markets business jumped by a quarter to $5.3 billion, thanks to volatility in the commodities and foreign exchange markets - a particularly strong segment for the bank.
Trading has emerged as a bright spot for Wall Street banks this quarter.
Clients are looking to rebalance their portfolios in the face of geopolitical tension, surging inflation and fears that aggressive Federal Reserve policy tightening could plunge the economy into a recession.
Citi's profit fell to $4.5 billion, or $2.19 a share, in the quarter ended June 30, from $6.2 billion, or $2.85 a share, a year earlier.
Excluding items, Citi earned $2.30 per share, according to Refinitiv calculations, beating the average analyst estimate of $1.68 per share.
The profit drop also reflected a $375m increase in reserves for potentially sour loss loans as the economic outlook darkens. A year earlier, exceptional government stimulus and the economy's recovery from the pandemic had allowed it to release $2.4 billion of reserves.
That pushed up credit costs to $1.3 billion, a sharp contrast to the $1.07 billion benefit a year earlier.
Investment banking revenue fell 46% to $805m as the volatility in markets dried up underwriting and advisory fees for investment bankers who drove Wall Street's profit during the depths of Covid-19.
The Treasury and Trade Solutions business - Citi's crown jewel - posted a 33% jump in revenue to $3 billion on the back of higher net interest income and fee growth.
The bank, which disclosed an exposure of $8.4 billion to Russia as of the second quarter, said it was mulling options to exit its consumer and commercial banking business in the country.
As the most global US bank, Citigroup has been hit by Western sanctions on Russia following its invasion of Ukraine, which has seen scores of corporations exit the country.
