World monetary markets have been turbulent this yr, and for Wall Road veterans that raises a well-known concern: How is Citigroup going to screw up this time?

The corporate fashioned by the 1998 mixture of John Reed’s Citicorp industrial financial institution and Sandy Weill’s Vacationers — which engaged in the whole lot from funding banking to subprime lending — has been accident-prone all through its historical past. An investor would have been higher off stuffing cash below a mattress than backing the Reed-Weill behemoth from the beginning. Citi inventory has misplaced most of its worth since their merger.

Nonetheless, when the financial institution reported second-quarter outcomes on July 15, it was the Citi naysayers who took a beating. Like its massive Wall Road friends, Citi’s earnings fell from final yr, when markets have been being pumped up by extraordinary financial and monetary stimulus. However its revenues of $19.6bn and web earnings of $4.5bn have been higher than many analysts had anticipated. Citi’s inventory rose 13 per cent on the day — and added to these positive aspects within the buying and selling classes that adopted.

Citi’s outcomes have been notably noteworthy as a result of they mirrored sturdy performances in companies that have been focused for extra funding by chief government Jane Fraser when she outlined her plans for a “multi-year journey” to elevated profitability on the financial institution’s investor day on March 2.

Fraser’s technique is a variation on the outdated Johnny Mercer music lyric advising listeners to “intensify the optimistic” and “remove the detrimental”. Citi is exiting practically all its worldwide retail operations and specializing in areas of energy equivalent to its Treasury and Commerce Options enterprise, referred to as TTS, which helps multinational corporations in additional than 90 nations handle money and funds and finance provide chains.

Described by Fraser because the “crown jewel” of her firm, TTS sparkled throughout the second quarter, reporting a 33 per cent leap in year-on-year revenues to $3bn.

Including to the lustre of those second-quarter outcomes have been the contributions of Citi’s fixed-income merchants, who hint their lineage again to the legendary Salomon Brothers funding financial institution, which was acquired by Vacationers shortly earlier than it agreed to merge with Citicorp. Mounted-income markets revenues rose 31 per cent from final yr to $4.1bn.

Mike Mayo, a Wells Fargo financial institution analyst who has usually criticised Citi prior to now, mentioned the outcomes marked a giant step ahead for Fraser, who grew to become chief government final yr. He referred to as her a “change agent” who’s taking over the issues of a “mishmash franchise” that her predecessors “by no means consolidated”.

“It is a financial institution that has perennially tousled greater than some other in durations of surprising volatility,” Mayo mentioned. “This has to offer Jane Fraser additional credibility and momentum for her transformation plans. She will go right into a room now and say, ‘Stick with me, we’re going someplace, come on the Jane Fraser voyage’.”

Amongst those that have just lately determined to go alongside for the experience is an intriguing investor — Warren Buffett’s Berkshire Hathaway, which revealed in Could that it had purchased $3bn in Citi shares, representing a 2.eight per cent stake within the firm.

Buffett has a sophisticated historical past with Citi — or not less than the a part of it that was as soon as Salomon. He invested within the agency in 1987 as a “white knight” to maintain it out of the palms of investor Ron Perelman. After Salomon was ensnared in a Treasury bond public sale scandal in 1991, Buffett stepped in as interim chair for a number of months, serving to engineer a revival of the agency that led to its $9bn sale to Vacationers in 1997. Whether or not Buffett or considered one of his underlings pulled the set off on the Citi purchases, as some have speculated, Berkshire’s look on the shareholder roll represents a big endorsement of Fraser.

By her personal estimates, Fraser has an extended solution to go. Even after its current share positive aspects, Citi was buying and selling at 56 cents on a greenback of guide worth, in contrast with price-to-book multiples of 1.05 at Goldman Sachs, 1.12 at Financial institution of America, 1.33 at JPMorgan Chase and 1.51 at Morgan Stanley, in keeping with Wells Fargo. As Mayo places it, the financial institution stays “worst at school in returns, effectivity and inventory market valuation”.

Overhauling its pc programs goes to be onerous work — chief monetary officer Mark Mason says Citi is making an attempt to consolidate 37 financial institution mortgage processing programs on to 1 platform. Political and financial components — starting from the battle in Ukraine to the potential of recession — will solely make Fraser’s life as chief government harder.

However for these of you preserving rating at residence, as they are saying in baseball, Fraser simply had a strong earnings day. She’s off to a very good begin.

gary.silverman@ft.com