Citigroup Inc shares surged more than 10% on Friday after the third-largest US bank posted a smaller-than-expected 27% drop in quarterly profit on unusual strength in its treasury services business and its trading desks cashed in on market volatility, cushioning a slump in investment banking.
The Treasury and Trade Solutions (TTS) business, Citi’s crown jewel, posted a 33% jump in revenue to $3 billion on the back of higher net interest income and fee growth, the best performance in a decade, Reuters report quoting the bank.
Markets revenue, meanwhile, jumped by 25% to $5.3 billion, thanks to volatility in the commodities and foreign exchange markets — a particularly strong segment for the bank.
Investors and analysts hailed the quarter as a long-awaited sign that Chief Executive Officer Jane Fraser’s ambitious plan to restructure the bank and bring its share price and profitability in line with peers was paying off.
“The results we saw from Citi today show that the turnaround plan is on track. Trading and interest income offset the industry-wide weakness in investment banking,” Thomas Hayes, chairman and managing member at Great Hill Capital LLC, wrote on Friday. “This is the cheapest large … bank with the highest upside potential.”