Citigroup's net income rose 10% to $3.2 billion in the second quarter compared to a year ago as its advisor and wealth divisions are showing signs of recovery.
The megabank's wealth division saw a 20% surge in net income to $210 million from the previous quarter and compared to $84 million in net income a year earlier. The earnings boost was partly driven by higher investment fee revenues, and lower expenses and credit costs.
"Combined with the strong pipeline advisory activity, it looks promising as we think about the rest of the year and into next year. Wealth is starting to improve," Citi CEO Jane Fraser said during the earnings call with investors.
Citi's wealth division was languishing in previous quarters as the company was going through a restructuring, cutting expenses and splitting the organization into five core business lines. The ongoing restructuring, which Fraser calls a "simplification" process, includes closing certain global platforms and cutting staff overhead.
"We have made meaningful progress on our transformation and on our simplification," Fraser said. "We are modernizing our infrastructure to improve our client service, and we are automating processes to strengthen controls. We are on a deliberate path. We will continue to execute our transformation and our strategy … to further improve our return over time."
READ MORE: Citigroup's wealth unit earnings down in Q1 amid major restructuring
Just two days before Citi released its Q2 earnings, the megabank agreed to pay $136 million in civil money penalties assessed by the Federal Reserve Board and the Office of the Comptroller of the Currency. The regulators allege that Citi did not make enough progress in cleaning up its data compliance, risk management and internal controls systems as required in consent orders from 2020.
Fraser addressed the regulatory actions on Friday, telling investors that Citi was working with their regulators to develop a plan to ensure that further controls and remediation efforts are completed.
"While these actions were not entirely unexpected to us, it is no doubt disappointing for our investors and for our people," she said. "This was never going to be linear, but I can assure you the investments we have been making are starting to come together to reduce risk, improve controls and deliver very tangible outcomes."
Overall, Citi's $3 billion net income was up from the previous year but down 5% from the first quarter 2024. A portion of Citi's revenue boost came from its investment banking line, which had a 60% jump in revenue to $853 million as well as a 72% revenue spike in its advisory business to $268 million compared to a year ago.
