Citigroup’s Profit Rises by 2% to $3.55 Billion, Exceeding Analyst Expectations
Citigroup, one of the largest financial institutions in the world, reported a 2% increase in profits for the third quarter, reaching $3.55 billion, or $1.63 per share. This exceeded analysts’ expectations of $1.23 per share. The company’s revenue also witnessed a significant growth of 9%, totaling $20.14 billion, outperforming estimates of $19.27 billion.
Citi’s markets operations played a crucial role in driving the positive results. Total trading revenue in this department rose by 10% to $4.48 billion. Fixed-income trading experienced a substantial increase of 14%, attributed to higher client volumes trading interest rates and currencies. However, equities trading revenue suffered a slight decline of 3%.
Revenue generated from Citi’s core business, which entails providing banking services for large corporations globally and facilitating money transfers, climbed by 13% to $4.72 billion. This growth was primarily driven by the surge in interest rates. In the corporate banking segment, which encompasses investment banking fees from mergers, stock and debt sales, as well as lending to major companies, revenue rose by an impressive 18%.
In the U.S. consumer bank, revenue rose by 13% to $4.89 billion, primarily due to increased credit card spending volumes and associated fees. The wealth management operation, an integral part of Citi’s planned turnaround, witnessed a modest 2% increase in revenue, amounting to $1.9 billion.
Despite the positive overall performance, Citi’s profitability metric, return on tangible common equity, declined from 8.2% to 7.7% compared to the same period last year. However, this result was still better than expected by industry analysts.
Reportedly, credit card spending volumes were higher year on year, although they did experience a decline when compared to the second quarter of 2021. Mark Mason, the Chief Financial Officer of Citigroup, mentioned that consumers remained resilient overall, but individuals with lower credit scores, often indicative of lower income, faced more pressure.
Expenses for the quarter increased by 6% to $13.5 billion, aligning with expectations. The bank’s executives are currently undertaking a substantial restructuring effort, which will result in a reduction in headcount in the forthcoming months.
Following the positive financial results, Citigroup’s shares rose by approximately 3% in early trading on Friday.