(Reuters) - Citigroup Inc C.N reported a higher-than-expected quarterly profit on Friday, driven by strength in its consumer banking business and a surge in equities trading.

The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren/File Photo

Global consumer banking revenue increased 7 percent on gains in North America, Mexico and Asia. Equity markets revenue jumped 38 percent, gaining from increased volatility in the quarter.

But weakness in the lender’s investment banking business was a sore point for investors. Citi’s stock was down nearly 3 percent in afternoon trade as the bank reported a 10 percent drop in revenue from the business.

Larger rival JPMorgan Chase & Co's JPM.N quarterly profit was also dented by a 7 decline in investment banking revenue.

“There were a lot of deals announced, but there were not a lot of deals closed on a year-over-year basis,” said Art Hogan, chief market strategist at B. Riley FBR in New York.

“I think that’s going to impact all of those involved in investment banking, Citigroup included.”

Still, Citi’s net income rose 13 percent in the first quarter. On a per share basis, Citi earned $1.68, topping analysts’ average estimate of $1.61, according to Thomson Reuters I/B/E/S.

“Good quarter for Citi as they continue to show progress in their return of & return on capital mantra,” Evercore analyst Glenn Schorr wrote in a note to clients.

The results benefited from a busy trading desk as volatility rocked global markets amid inflation fears and heightened trade tensions, in contrast to a calm 2017.

Total revenue rose about 3 percent to $18.87 billion, while operating expenses rose 2 percent to $10.92 billion.

The rise in equity markets revenue offset a 7 percent drop in Citi’s bigger fixed income trading business. Combined, the two were up 1 percent.

Investment banking revenue fell to $1.13 billion from $1.29 billion and Citi blamed “declines in the overall market wallet and the timing of episodic deal activity.”

Return on tangible common equity, a measure of profitability, reached 11.4 percent in part to the company having had to mark down its equity value in the fourth quarter because of the tax law change.

Citi said in January it expected return on common tangible equity at 10.5 percent for the full year.

Shares of the fourth largest U.S. bank by assets were down 2.8 percent at $70.10. They have gained 23 percent in the last 12 months.