Citigroup (C, $68.80) to focus on investment banking business as Q1 shows positive results

Citigroup Inc. reported estimate-beating results on Monday as its investment banking business grew, and the company expanded its net-interest margin. Analysts believe that a reduction in tax rate to 21% is responsible for Citi’s improvement from a year ago.

However, the bank’s income from continuing operations declined slightly, partly due to divestiture last year. But the bank is striving to increase its digital capabilities to attract deposits domestically despite its light presence in U.S. branch network. Citi’s North American deposits edged up 1% but its international consumer deposits rose 3% during the quarter, indicating that the bank is growing deposits faster abroad than in the U.S.

Other key developments include an improved 11.9% return on average tangible common shareholder’s equity, $5.1 billion return in capital to shareholders, a 20% rise in investment banking revenue to $1.4 billion, total loans by assets rose 3% to $682.3 billion, deposits grew by 5% to $1.03 trillion, and net-interest margin expanded by 8 bps to 2.72% in the current quarter and total operating expenses fell 3% to $10.58 billion.

But there were setbacks too. A 24% drop in equities trading impacted Citi’s overall revenue which fell 2% to $18.58 billion and revenue from the bank’s largest business consumer banking was flat at $8.5 billion largely owing to weakness in the Asia region.

The bank is still optimistic that an absence of an interest rate hike, as signaled by the Federal Reserve, would not negatively impact the overall results of the year.