Citigroup beat estimates for first-quarter profit on Tuesday and had the highest revenue in a decade, as geopolitical ‌tensions fueled market volatility and boosted trading revenue, while strong dealmaking buoyed investment banking fees. Shares of the bank hit their highest since November 2008 on Tuesday, last up 2.9%.

Trading desks benefited from heightened volatility across asset classes as the ​U.S.-Israeli war on Iran escalated tensions in the Middle East and obstructed oil shipping through the Strait of Hormuz, while concerns over AI-driven disruption triggered a selloff in software stocks. The rebalancing of portfolios by clients and sharp price swings ​boost ​trading volumes.

Profit increased to $3.06 per share in the three months ended March 31, the third-largest U.S. lender reported on Tuesday. This compares with analysts' average estimate of $2.65 per share, according to data compiled by LSEG.

Citi beat its target for profitability in the first quarter, posting a 13.1% return over tangible common equity. The bank is aiming for 10% to 11% return ⁠for the full year.

"The first quarter is always the strongest, and we have an unclear macro environment ahead," CEO Jane Fraser said on a call with analysts when asked if the profitability guidance should go up after the first quarter result. Its results come after Goldman Sachs kicked off the earnings season for banks on Monday, beating expectations for quarterly profit, driven by strength in dealmaking and equities trading. The largest U.S. lender, JPMorgan Chase, and Wells Fargo beat estimates for first-quarter profit on Tuesday. Bank of America and Morgan Stanley will report on Wednesday.

Citi reported its highest quarterly revenue in a decade, $24.6 billion, boosted by ​market volatility which increased its total markets ‌revenue by 19% over ⁠a year earlier to $7.2 billion.

Fees from equity ⁠markets rose 39%, helped by growth across derivatives, prime services and cash equities. Prime balances in the markets division jumped more than 50%, the firm said.

Revenue in fixed income trading was up 13% over a ​year earlier, rates and currencies revenue rose 6% and other fixed income rose 27%, driven by strong performance in commodities.

DEALS HOLD UP

Hot dealmaking activity by ‌the investment bank increased Citigroup's banking division revenue by 15% in the quarter. Fees in equity underwriting rose 64% and in M&A ⁠advisory, 19%. Fees in fixed income underwriting fell 6%.

Industry-wide investment banking revenue rose nearly 14% to about $28.2 billion in the first quarter, according to Dealogic. Citigroup ranked fifth by fees among global banks during the period. "The M&A pipelines remain strong," Citigroup Chief Financial Officer Gonzalo Luchetti said. But the CFO noted that if the Middle East conflict remains in place for a very long time, that may have an impact in the second half of the year.

 

BANK FOCUSED ON ORGANIC GROWTH

Net interest income, the difference between what a bank earns on loans and pays out on deposits, rose 12%. The wealth management and retail banking division had 11% growth in revenue, but it remains the division with the lowest return, 10.8% over tangible common equity in the first quarter. Fraser denied any intention of acquiring other banks or wealth management firms. "I want to be crystal clear, we are only interested and focused on organic growth. Period, end of story," she said. The retail bank will work to improve profitability focusing on the six U.S. urban areas where it is currently present, aligned with the wealth management strategy, the CEO added.

Expenses climbed 7% in the quarter, mainly driven by costs stemming from ‌higher employee compensation and benefits, including severance costs.

CEO Fraser said in March Citi will be front-loading some severance expenses in ⁠the first quarter, with overall costs likely to come in below last year's levels.

The bank continued to reduce headcount in 2026 ​as part of its ongoing restructuring efforts, with new rounds of layoffs marking the next step in Fraser's strategy. Fraser also said the bank has 90% of its transformation work completed, including the improvements required by consent orders, with the exception of some regulatory data issues. The completed projects need to go through internal validation and later review by the regulators, Fraser said, adding that the timeframe is for regulators to determine.

"We demonstrated our commitment to ​returning capital by repurchasing $6.3 billion in ‌shares during the quarter," said Fraser.

Shares of Citigroup have risen 104.9% over the past 12 months, outperforming Wall Street peers and the KBW bank ⁠index , as progress in its turnaround under CEO Jane Fraser boosted investor confidence. ​Citi's valuation still lags peers.

 

(Reporting by Prakhar Srivastava in Bengaluru and Tatiana Bautzer in New York; Editing by Devika Syamnath, Megan Davies, Rod Nickel and Nick Zieminski)