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Citigroup posted a better than expected 17 per cent rise in quarterly profits, propelled by revenue growth in the big US bank’s institutional business.

Net earnings rose to $4.09bn in the first three months of this year, from $3.5bn in the same period in 2016. The figure exceeded Wall Street expectations of $3.41bn.

Revenues climbed 3 per cent on the same basis to $18.12bn, also exceeding Wall Street’s forecast of $17.44bn.

Citi’s Wall Street business shined, with revenues from the institutional clients division jumping 16 per cent to $9.13bn. Investment banking revenues surged 39 per cent to $1.21bn. Its large fixed income trading unit notched a 19 per cent rise in revenues to $3.62bn, compared with forecasts for $3.52bn.

Growth in consumer banking was more subdued, ticking up 1 per cent to $7.82bn.

The solid performance by Citigroup in the first quarter echoed strength at JPMorgan Chase, the biggest US bank by assets, which disclosed stronger than expected profits that were powered by its investment banking business.

Bank stocks surged following the election last year of Donald Trump, but have come under pressure since the start of March after the failure of the administration’s healthcare legislation threw into doubt expectations of regulatory relief and pro-growth policy initiatives.

Analysts will be looking to hear from Citi’s executives on what their outlook is for the rest of this year on those issues. In addition, investors will also look get a glimpse of Citi’s expectations for rate rises going forward.

The Federal Reserve has said it plans to begin tightening monetary policy more quickly this year, something that could be a boon to banks’ retail businesses if they are able to charge more for loans but keep their own credit costs in check.

Investors are also keeping a close eye on the quality of loans, given rising concerns over sub-prime auto lending, commercial real estate loans and broader questions as to whether bubbles could be brewing in certain markets.

Those jitters did not appear to materialise in Citi’s first quarter results, which showed the New York bank released $77m in loan loss reserves, from a build of $64m in the fourth quarter of 2016.

Copyright The Financial Times Limited 2017. All rights reserved.
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