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Citi earnings beat estimates as fixed-income trading spikes

Business Insider logo Business Insider 1/14/2020

Citigroup reported fourth-quarter earnings that beat profit and revenue expectations on Tuesday morning.

The company posted a 49% gain to fixed-income trading revenue, more than double the forecasted jump, according to analysts surveyed by Bloomberg. The division was driven by a recovery in the US bond market following a summer recession scare.

Citi stock traded as much as 1% higher on the report.

Here are the key numbers:

Revenue: $18.4 billion, versus the $17.85 billion estimate

Adjusted earnings per share: $1.90, versus the $1.83 estimate

Fixed-income trading revenue: $2.9 billion, versus the $2.37 billion estimate

"We enter 2020 in a strong competitive position, from capital and liquidity to talent and technology," CEO Michael Corbat said in a statement. "With increased revenues and disciplined expense management, we had positive operating leverage, even as we continued to make significant investments in the franchise."

The company is in the midst of a massive overhaul, focusing on expanding its wealth management business and reviewing its branch network. Citi is aiming to compete with national consumer banks such as JPMorgan Chase and Bank of America. The bank laid off hundreds of workers in its trading business in July as part of the transition away from high-risk assets.

Citi is among the several major banks reporting earnings today. Wells Fargo and JPMorgan Chase also reported their latest financial figures, with the latter firm surpassing analyst expectations and posting a 31% jump in corporate and investment bank revenue.

Wells Fargo missed expectations for earnings and revenue, with fourth-quarter profit halving from the year-ago period. The bank's shares sank as much as 2.5% on the news.

Bank of America, Goldman Sachs, Morgan Stanley, and Charles Schwab are slated to report earnings later in the week.

Citigroup traded at $81.46 per share at 8:05 a.m. ET Tuesday, up roughly 1.4% year-to-date.

The company has 24 "buy" ratings, four "hold" ratings, and one "sell" rating from analysts, with a consensus price target of $88.48, according to Bloomberg data.

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