Citigroup Inc's first-quarter profit beat Wall Street expectations on Friday as it earned more from borrowers paying higher interest on loans, benefiting from a tighter monetary policy by the Federal Reserve.
However, it set aside $241 million in the quarter to cover potential loan losses against the backdrop of a slowing economy and compared to a reserve release of $138 million a year ago.
The banking sector was jolted by the collapse of Silicon Valley Bank and Signature Bank last month, which wiped out billions of dollars in market value. In Europe, Credit Suisse was rescued by rival UBS Group AG in a government-backed takeover.
The lender's deposit growth was flat at $1.33 trillion from a quarter as well as a year ago as investors moved their cash into money market funds to chase greater yields.
Its loans also fell marginally to $652 billion, while its net interest income rose 23% to $13.3 billion.
Analysts expect an economic slowdown to curb demand for loans and depress net interest margins (NIM) across the industry in the coming quarters.
Citi's NIM could be the worst hit due to its high deposit betas, the difference in interest rates banks pass on to consumers, Moody's said in February. That could derail its plan to better rival peers in profitability.
Under Chief Executive Jane Fraser, the bank has been simplifying its businesses in an effort to boost revenue and become more competitive with rivals.
Citi earned $1.86 per share in the first quarter, beating analysts' average estimate of $1.67, according to Refinitiv data.
Net income rose 7% to $4.6 billion, or $2.19 per share, in the three months to March 31 from $4.3 billion, or $2.02, a year earlier.
Citi's investment banking revenue sank 25% from $774 million a year ago, weighed down by the most sluggish market for deals in more than a decade.
It slipped four rungs to the ninth position in 2023 in the list of financial advisors based on deal value, according to data from Dealogic.
SVB Crisis: What led to the collapse of start-ups' favourite bank?
SVB crisis: How the ripples of the bank's plunge reached foreign shores
Asia witnesses limited contagion risk from Silicon Valley Bank's woes
SVB crisis sends jitters through startup world: Here's what we know
SaaS firm Freshworks says exposure to Silicon Valley Bank minimal
JPMorgan profit surges 52% in Q1 on back of robust consumer business
Infosys Q4 results: Net profit rises 7.8% to Rs 6,128 cr; revenue up 16%
Anand Rathi Wealth's profit surges 33% in FY23, revenue rises 31%
Anand Rathi Wealth Q4 profit rises 23% to Rs 43 cr; dividend Rs 7 per share
TCS Q4 net up 15% to Rs 11,392 cr; meets estimates but revenue disappoints
Disclaimer: No Business Standard Journalist was involved in creation of this content