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Citigroup beats profit estimates on loan-loss release, says it is exiting 13 markets outside U.S.

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Jane Fraser, chief executive officer for Latin American at Citigroup Inc., speaks during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Monday, April 29, 2019.

Kyle Grillot | Bloomberg via Getty Images

Citigroup on Thursday posted results that beat analysts’ estimates for first-quarter profit with strong investment banking revenue and a bigger-than-expected release of loan-loss reserves.

The firm also said it was shuttering retail banking operations in 13 countries across Asia and parts of Europe to focus more on wealth management outside the U.S., one of the first big strategic moves made by CEO Jane Fraser, who took over in February.

Shares of the bank climbed 3.1% in premarket trading.

The bank reported profit of $7.94 billion, or $3.62 a share, exceeding the $2.60 estimate of analysts surveyed by Refinitiv. Revenue of $19.3 billion topped the $18.8 billion estimate.

Citigroup said it had released $3.9 billion in loan-loss reserves in the quarter, which resulted in a $2.06 billion gain after $1.75 billion in credit losses in the period. Analysts had expected a $393.4 million provision in the quarter.

The bank said it was exiting consumer operations in Australia, Bahrain, China, India, Indonesia, Korea, Malaysia, the Philippines, Poland, Russia, Taiwan, Thailand and Vietnam. The plan is to focus its non U.S. consumer banking operations on Singapore, Hong Kong, the UAE and London — places with a great concentration of wealth, according to Fraser.

“As a result of the ongoing refresh of our strategy, we have decided that we are going to double down on wealth,” Fraser said in the release. The move to focus on the remaining markets “positions us to capture the strong growth and attractive returns the wealth management business offers through these important hubs.”

Citigroup lacked the scale to properly compete in the 13 markets it is leaving, she said. Investment banking operations will continue in markets where the firm is exiting consumer operations, the bank said.


Here’s what Wall Street expected:

Earnings: $2.60 a share, 147% higher than the year earlier period, according to Refinitiv.

Revenue: $18.8 billion, 9.2% lower than a year earlier.

Net Interest Margin: 1.99%

Trading Revenue: Fixed Income $4.43 billion, Equities $1.16 billion

Citigroup CEO Jane Fraser is ready for the spotlight.

Fraser, who officially became CEO in February, is reporting results for the first quarter at the helm of the country’s third-biggest U.S. bank.

Like the rest of the industry, Citigroup is expected to release some of the money it had previously set aside for anticipated defaults tied to the coronavirus pandemic. The firm, which has sizeable fixed-income trading operations, may also report a boost from trading desks in the quarter.

Analysts will be keen to hear Fraser’s vision for the bank, as well as details on her plan to appease regulators who have criticized the firm’s risk management controls.

On Wednesday, JPMorgan Chase and Wells Fargo both posted results that exceeded analysts’ expectations on reserve releases, while Goldman Sachs beat estimates on strong advisory and trading results.

Shares of Citigroup have climbed 18% so far this year, compared with the 26% advance of the KBW Bank Index.

This story is developing. Please check back for updates.

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