In a Friday report, Citigroup reported higher net income and better-than-expected revenue for the first quarter, boosting its stock even as the bank’s executives cautioned about economic prospects. Citigroup reported earnings per share of $2.19 for the quarter. Despite not being clear how comparable that number is to estimates, it appears to be a solid beat in GAAP earnings and adjusted earnings per share. Shares of the bank rose about 4.8%. The results were partly driven by higher interest rates, which resulted in a rise of 18% in personal banking revenue. Fixed income market revenue rose 4% year over year, though investment banking and equity market revenue declined.
A key area of concern for investors is how Citi adjusts its buffer for loan losses in light of the uncertain economic outlook. According to StreetAccount, Citigroup reported a total provision for loan losses of $1.98 billion, slightly above the $1.89 billion expected by analysts and up 7% from the prior quarter. The outlook for the economy has been muddled by the failure of Silicon Valley Bank and Signature Bank last month, which could potentially slow loan growth throughout the economy. “We are in a strong position to navigate whatever environment we face, which is particularly relevant given the degree of uncertainty today. … We expect the recent events to be disinflationary and credit to contract. We believe it is now more likely that the U.S. will enter into a shallow recession later this year,” Citigroup CEO Jane Fraser said on an investor call. The CEO added that Citi saw a “notable softening” in consumer spending over the quarter.