Citigroup shares rise after better-than-expected second-quarter profit

Key conclusions

Citigroup shares rose in premarket trading on Friday after the bank reported second-quarter profit that beat expectations.
The bank’s net income rose 10% year over year to $3.2 billion, or $1.52 per diluted share.
Revenue rose 4% following strong performance in the banking and trading sectors.
Citi’s operating costs, which came under the spotlight following the completion of its restructuring program, fell 2%.

Citigroup (C) shares rose in premarket trading on Friday after the bank reported second-quarter profit that beat analysts’ estimates.

Citi’s net income of $3.2 billion was 10% higher than in the year-ago quarter, while diluted earnings per share (EPS) rose to $1.52 from $1.33 a year earlier, beating analysts’ consensus of $1.38 compiled by Visible Alpha.

The bank’s revenue rose 4% to $20.1 billion, slightly below estimates, driven by growth in its banking and trading segments. Equity trading revenue rose 37%, driven by gains in derivatives.

“Rationalization of the expenditure base is starting to bear fruit”

“Growth in client investment assets has boosted investment income, and our focus on streamlining our expense base is starting to pay off,” said Jane Fraser, CEO of Citi.

Investors and analysts have been closely watching Citi’s cost management, especially as this is the first full quarterly report since Fraser completed a wide-ranging cost-cutting restructuring program in March.

The bank’s operating expenses fell 2% to $13.4 billion, even as the cost of credit rose, “primarily due to higher net credit losses on cards, partially offset by a lower allowance for credit losses (ACL).”

Citi shares were up 2.5% to $67.36 about 30 minutes into Friday’s session. They have gained about 30% since the beginning of the year.