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Citi’s second-quarter earnings were a positive signal to investors that chief executive Jane Fraser’s massive overhaul is already beginning to bear fruit.
Citi saw revenue of $20.1 billion for the second quarter, it reported Friday, up 4% from last year and matching Wall Street estimates, according to data compiled by FactSet. The New York-based bank saw $3.2 billion in net income, or $1.52 per share, well above analysts’ expected $1.39 per share.
The bank capped off its massive reorganization in the first quarter of the year, and its operating expenses fell 2% year-over-year in the second quarter as a result of the overhaul, it reported. Expenses totaled $13.4 billion in the three months ended June 30.
“Our results show the progress we are making in executing our strategy and the benefit of our diversified business model,” Fraser said in a statement accompanying the report, pointing to the “incredible amount of progress in simplification - both strategically and organizationally.”
Its banking business also saw a significant boost, up 38% annually. Equities similarly saw 37% growth, thanks to a healthy derivatives market.
Shares of the third-largest U.S. bank popped up 2% in pre-market trading on Friday. This year so far, Citi’s stock has climbed 24%.
Last September, Citi embarked on its largest reorganization in almost two decades, splitting the bank into five interconnected business units. The reorganization, which was completed in March, was aimed at cutting costs and simplifying the bank’s structure in an effort to turn around the firm’s stock and financial performance to keep pace with its growing peers.
The bank ended up eliminating 7,000 positions, which is expected to generate $1.5 billion of annualized run rate expenses, Fraser told analysts in a call in April. The restructuring will save Citi a projected $2.5 billion in cumulative annualized run rate in the medium term, Fraser said.
But investors remained cautious after the bank reported a loss of $1.84 billion in the fourth quarter of 2023, booking a $780 million charge directly related to its structural changes. It warned that it could take another $1 billion charge in 2024 to cover severance and other expenses.
So far, the reorganization has seen mixed reviews, but it received an important endorsement from legendary investor, Warren Buffett.