Citi starts bank earnings on a positive note thanks to buybacks

Citigroup kicked off bank earnings season on Monday with solid results that were boosted by a splurge in share buybacks.

The stronger-than-expected earnings from Citi suggest America’s big banks continued to chug along during the second quarter in the face of a challenging economic and market backdrop.

Much like the US economy, Citi benefited from strength among consumers that helped offset weakness elsewhere, especially in capital markets.

“We navigated an uncertain environment successfully by executing our strategy, and by showing disciplined expense, credit and risk management,” Citi CEO Michael Corbat said in a statement.

Later this week, Citi rivals JPMorgan Chase, Wells Fargo and Bank of America are scheduled to post quarterly results.

Citi reported $4.8 billion in second-quarter profit, up 7% from the year before, thanks to higher revenue and lower taxes and expenses. The bank’s bottom line was lifted by a gain on its investment in Tradeweb, an electronic trading platform that went public in April.

Excluding the Tradeweb gain, Citi’s per-share profit totaled $1.83, topping the Street’s view of $1.80. Citi’s EPS was driven by a 10% decline in its shares outstanding as the bank repurchased 54 million shares during the quarter.

Citi, which has more overseas exposure than its big bank peers, reported a 3% increase in global consumer banking revenue. All three geographical areas grew revenue.

“We have good momentum and solid growth across our consumer franchise, particularly in the US,” Corbat said.

However, revenue was flat at Citi’s institutional clients group. Citi’s fixed income markets group suffered a 4% decline in revenue excluding the Tradeweb gain due to a “challenging trading environment,” especially in rates. Equity markets revenue declined 9% due to lower client activity.

Citi has been the star of America’s big banks of late, with its stock up 38% in part due to enthusiasm for its aggressive share buybacks. Citi shares ticked higher in premarket trading on Monday.