The Citibank building on Canada Square in the heart of London’s Canary Wharf financial district on May 7, 2024.
Mike Kemp | In images | Getty Images
Citi Group reported third quarter results On Tuesday, that exceeded Wall Street expectations, with growth in investment banking and asset management. However, the bank set aside more money to offset potential credit losses.
The bank’s shares, which had been trading higher before the market opened, recently fell 4.8%.
Here’s what the company reported, compared to what Wall Street analysts polled by LSEG expected:
- Earnings per share: $1.51 vs. $1.31 expected
- Gain: $20.32 billion versus $19.84 billion expected
During the quarter, net income fell to $3.2 billion, or $1.51 per share, from $3.5 billion, or $1.63 per share, a year earlier. Earnings were negatively impacted by higher credit costs, including a net increase of $315 million to Citi’s allowance for credit losses.
Chief Financial Officer Mark Mason said during an analyst call on Tuesday that the bank is seeing a “stabilization” in delinquent credit management among its retail customers and is “well reserved” in that area.
Revenue rose 1% to $20.32 billion, compared to $20.14 billion a year ago. Contributing to the increase was an 18% increase in banking revenues, led by a 31% gain in the investment banking business. Asset income rose by 9%.
On the market side, equity market income rose 32% year on year, but fixed income income fell 6%.
Citigroup CEO Jane Fraser took over in March 2021 and has focused on downsizing the bank during her tenure. That includes reducing Citigroup’s global presence and laying off employees.
“Our transformation is our first priority. This quarter, we closed another long-standing consent order related to the effectiveness of our anti-money laundering systems. We have increased our investments in areas where we have not made sufficient progress, such as data quality management,” Fraser said on the call.
“I and the management team remained steadfast and determined to see this transformation through and make it happen,” Fraser continued.
Citi’s net interest income fell 3% year over year to $13.4 billion, while margins shrank. Net interest income was $11.96 billion, excluding market activities, which also declined from a year ago. The company said it expected fourth-quarter non-market figures to be about the same as this period. However, the company did not provide net interest income guidance for 2025.
Citigroup cut costs 2% year over year and expects full-year expenses to be in line with expectations of $53.5 billion to $53.8 billion, excluding some regulatory costs.
Citigroup shares rose more than 28% through Monday, outperforming both the S&P 500 and the financial sector.
The other major banks that have reported third-quarter results so far have also beaten earnings expectations, including Goldman Sachs and JPMorgan Chase.