Citi, Bank of America post higher profits as traders cash in on tariff turmoil

Two of the biggest US banks, Citigroup and Bank of America, notched better-than-expected profits in the first three months of this year as traders raked in higher revenues amid President Donald Trump’s threat to start a global trade war.The banks reaped the benefits of investors adjusting their portfolios after being spooked about a possible return to protectionist trade policies, following a similar trend at fellow Wall Street giants JPMorgan and Goldman Sachs.President Trump had unveiled a string of ‘reciprocal’ tariffs on April 2, dubbed Liberation Day, to be slapped on imported goods, only to perform a last-gasp U-turn last Wednesday as US government borrowing costs rose.Citi said its Q1 profit rose 21% to $4.1 billion, or $1.96 per share, on higher revenue and lower costs from the same time last year, while BoA rose from 11% to $7.4 billion from 2024.Analysts surveyed by the London Stock Exchange Group had forecast Citi’s $1.85 per share, while they predicted BofA earnings to amount to 82 cents per share.Citi’s equities traders benefitted from “increased market volatility” and an uptick in client transactions, powering revenues to $1.5 billion over these past three months and up 23% year-on-year.The bank’s fixed-income traders generated $4.5 billion in revenue, mainly in currencies and government bonds, an 8% increase from the same time in 2024.BofA also saw equities trading revenue soar, rising by 17% to $2.2 billion, while fixed-income revenue rose 5% to $3.5 billion.“Trading results were the star of the show,” said Stephen Biggar, banking analyst at Argus Research, who warned executives that they may see further a dip in dealmaking this year.In the first three months of 2025, US M&A activity fell 13%, according to data from Dealogic, and Biggar said that another collapse “could doom a 2025 recovery if tariff turmoil is not resolved soon.”Citigroup posted $1.1bn in investment banking fees during the first three months of the year,...