Citigroup's Results Climb, Buoyed by Consumer Bank

Cash equities, underwriting help Citi to Q3 earnings beat

The New York City-based banking giant reported Q3 earnings per share (EPS) of $1.42, which was $0.10 better than the consensus of $1.33.

The bank's worldwide consumer business saw an 8% rise in revenue, driven by higher loans and deposit volumes growth, Citi said.

"We had revenue increases in numerous products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses", Citigroup chief executive Michael Corbat said.

"Investors are taking exception to both companies adding to their credit card loan reserves", said Jason Goldberg, analyst at Barclays. Citi reported a 3% year-on-year rise in global consumer banking revenue, while in North America retail banking jumped by 12%, excluding mortgages.

Citi-branded cards in the USA provide about 10 percent of Citigroup revenue and profits and are seen by Corbat as one of the company's best shots at growing profits. "The economic data is the strongest we've seen in years".

Citigroup's investment bank was the driver of the bank's profit growth in the quarter, despite a notable drop in bond trading revenue.

In early notes to clients, analysts characterized the results as "solid" or "pretty good", given problems in bond trading that have affected Wall Street banks for some time.

Versus the same period of 2016, fixed income Markets revenues declined 16%, with Citi laying the blame at the feet of low levels of volatility, which led to lower revenues from G-10 rates and currencies.

"We all would anticipate greater loan growth if there was a bit more clarity as far as you know when or if tax reform was going to pass", Chief Financial Officer John Gersprach told reporters. It will report third-quarter earnings on Tuesday.

The drop in C stock is likely connected to its fixed income markets revenue for the third quarter of 2017.

Still, management maintained earlier guidance for full-year net interest income, expenses, charge-offs and loan growth, indicating that they expect JPMorgan's other businesses to continue to offset capital markets pain.

Citi's shares were down 2 percent in late morning trade, the worst performer among the major USA banks.



Other news