Citigroup posts 38% stock-trading growth amid global market gyrations

Stock-trading growth amid global market turmoil helped Citigroup, like rival JPMorgan Chase, blow past Wall Street’s quarterly profit estimates.

Revenue in the business climbed 38 percent to $1.1 billion, curbing the effects of a 7 percent drop in bond markets, the New York bank said Friday. The gains combined with growth in consumer banking, Citi’s second-largest division, to push firmwide profit up 13 percent to $4.62 billion, or $1.68 a share, topping the $1.61 average estimate from analysts surveyed by FactSet.

“While market conditions have been uneven so far this year, our first quarter results show our ability to deliver for both clients and shareholders and we look forward to sustaining this momentum for the balance of the year,” Citi CEO Michael Corbat said in a statement.

Both Citi and JPMorgan benefited from rising volatility at the start of the year as the prospect of more rapid rate hikes by the Federal Reserve and concern that President Trump’s protectionist policies would lead to a trade war with China roiled financial markets.

The Dow Jones industrial average, which reached a record high of 26,616 in January has since given up nearly 9 percent of its value. The return of volatility, compared with steady gains last year, helped drive JPMorgan’s stock-trading revenue 26 percent higher.

Lenders have also taken advantage of steadily rising interest rates, with the Fed approving its sixth rate hike of 25 basis points since 2015, taking its benchmark to a range of 1.5 percent to 1.75 percent in March. Banks typically bolster revenue by passing such increases on more quickly to borrowers than depositors.

“At the most macro level, the environment is still positive for banks,” Kenneth Leon, an analyst at CFRA Research, said in a telephone interview earlier this week. He predicted the largest firms would benefit from both higher interest rates and higher volatility due to geopolitical issues.

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