Citigroup said Thursday that net income surged 17% during the first quarter, as market optimism over President Donald Trump's tax-cutting and deregulatory proposals drove a frenzy of bond and stock trading.
Net income was $4.1 billion, or $1.35 a share, the New York-bank said in a statement. The result exceeded the $1.23 a share average forecast of analysts in a FactSet survey.
Investor optimism over Trump's proposals to stimulate the economy has fueled Wall Street's trading engines, bringing a windfall to banks like Citigroup and JPMorgan Chase that function as hubs for global markets. New York-based JPMorgan on Thursday also cited fixed-income trading in reporting its own 17% jump in profit.
"We had good engagement from clients," Citigroup CFO John Gerspach said on a conference call with reporters. The lender fell 47 cents to $58.04 in New York trading on Thursday, widening this year's losses to 2.3%.
Citigroup's fixed-income markets unit, which includes bond-trading as well as foreign exchange, posted a revenue increase of 19%, with gains from government as well as corporate bonds. The bank's stock-trading unit raised revenue by by 10%.
Such gains were in line with estimates from Deutsche Bank that Wall Street's total trading revenue would increase by an average of 15% from a year earlier.
EXCLUSIVE LOOK INSIDE: Citigroup is a holding in Jim Cramer's Action Alerts PLUS charitable trust portfolio. Want to be alerted before Cramer and the AAP team buy or sell the stock? Learn more now.
And it wasn't just trading. The bank's investment-banking unit also thrived as companies rushed to sell bonds before expected Federal Reserve interest-rate increases, while buoyant stock markets prompted more companies to sell shares through initial public offerings. Revenue from debt underwriting climbed 39% to $733 million, while equity-underwriting fees almost doubled to $235 million.
The quarter included $750 million of gains on asset sales, as well as a $300 million charge related to the bank's exit from the U.S. mortgage-collections business.
On the downside, loan growth remains subdued. Citigroup's book of loans climbed just 2% to $629 billion.
For Citigroup, that's partly because many of the bank's biggest lending clients are multinational corporations with ample cash hoards and the ability to tap bond markets for financing that comes at a lower cost than loans, according to Gerspach.
"To the extent that they need financing," Gerspach said, "They do so via longer-term debt financing in the capital markets."
This article, originally published at 8:32 a.m., has been updated with company comments. An earlier version contained an incorrect figure for net income.