Citigroup (C) Q2 Earnings Beat Estimates On Top-Line Strength

Citigroup (C - Free Report) delivered an earnings surprise of 6.4% in second-quarter 2020 on robust revenue strength. Earnings per share of 50 cents for the quarter handily outpaced the Zacks Consensus Estimate of 47 cents. Results were, however, down significantly from the prior-year quarter.

Citigroup recorded higher revenues on investment banking and market revenues during the reported quarter. Though equity market revenues disappointed on a more challenging environment in derivatives, and prime finance and securities services revenues declined, fixed income revenues were on an upswing reflecting strength in rates and currencies, spread products and commodities. Moreover, investment banking revenues increased on solid underwriting business, partly muted by lower advisory business.

Additionally, fall in expenses was on the upside. However, elevated cost of credit due to the pandemic is a major drag.

Net income was $1.3 billion compared with the $4.8 billion recorded in the prior-year quarter.

Revenues Improve, Expenses Down

Revenues were up 5% year over year to $19.8 billion in the second quarter. The reported figure also beat the Zacks Consensus Estimate of $19.2 billion. Higher revenues from Institutional Clients Group (ICG) mainly led to this upside, partly offset by lower revenues from Global Consumer Banking (GCB) and Corporate/Other.

In the Institutional Clients Group (ICG) segment, revenues came in at $12.1 billion in the quarter, up 21% year over year. Higher investment banking and fixed income market revenues were partly muted by lower equity market revenues and corporate lending.

GCB revenues decreased 10% year over year to $7.3 billion. Lower revenues in North, Latin America and Asia GCB due to the pandemic resulted in this decline. Notably, both retail banking and card revenues witnessed declines.

Corporate/Other revenues came in at $290 million, plunging 49% from the prior-year quarter. This downside stemmed from the wind-down of legacy assets and impact of low rates, partly mitigated by AFS gains.

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