Citigroup (C) Third Quarter Earnings Report

citi group reported its third-quarter results on Friday morning, with strong growth in both institutional clients and personal banking driving higher-than-expected revenue and earnings per share.

Here’s what the company announced compared to what Wall Street expected, according to a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: $1.63, or $1.52 excluding the impact of divestitures, versus $1.21 expected. At this point, it’s unclear whether analysts included that element of divestitures in their estimates.
  • Revenue: $20.14 billion, versus $19.31 billion expected

Revenue and net income increased 9% and 2%, respectively, year over year.

Citigroup’s institutional clients unit reported $10.6 billion in revenue, up 12% year over year and up 2% from the second quarter. The bank said it was the best third quarter in the last decade for rates and foreign exchange earnings.

Meanwhile, the personal banking and wealth management division generated $6.8 billion in revenue, up about 10% year over year and up 6% from the second quarter.

“Despite headwinds, our five interconnected core businesses each posted revenue growth resulting in overall growth of 9%,” CEO Jane Fraser said in a news release.

Citi CEO Jane Fraser speaks at the 2023 Milken Institute Global Conference in Beverly Hills, California, on May 1, 2023.

Mike Blake | Reuters

Despite the better-than-expected results, the bank’s shares closed down 0.2% on the day. Citigroup shares are now down more than 8% so far this year.

Among other banks that reported their quarterly results on Friday morning, JPMorgan and Wells Fargo both showed better-than-expected revenue numbers in their third-quarter reports.

Citigroup reported $1.84 billion in total credit costs at the end of the quarter, slightly up from $1.82 billion at the end of the second quarter and $1.37 billion a year ago. That metric includes a net accumulation of $125 million in the reserve for credit losses during the third quarter. Analysts expected the total cost of credit to reach $1.96 billion, according to FactSet’s StreetAccount.

“The global macroeconomic backdrop remains a story of desynchronization. In the US, recent data implies a soft landing, but history would suggest otherwise and we are seeing some cracks on the downside. [credit score] consumer. In the euro zone and the United Kingdom, the outlook became clearly more negative,” Fraser said in a call with analysts.

Friday’s earnings report includes the period during which Fraser announced the bank would be divided into five main business lines, the latest change for the CEO since he took over in March 2021. Fraser said Friday that the changes They should be completed by early 2024 and generate financial benefits. down the line.

“While expenses are not the primary driver of organizational changes, they will help us begin to bend the expense curve in the fourth quarter of next year,” Fraser said.

The new structure, announced on September 13, is expected to include job cuts. Chief Financial Officer Mark Mason declined to provide guidance on headcount during Friday’s call.

Citigroup’s net interest margin for the quarter was 2.49%, above the 2.41% expected, according to FactSet’s StreetAccount. Mason said the company expects its full-year 2023 net interest income to be slightly above previous guidance.

Another Fraser initiative has been Citi’s sale of its retail banking business in some international markets. The latest move on that front came on October 9, when the bank announced it had reached a deal to sell its consumer wealth portfolio in China. Fraser said Friday that the bank expects to close the sale of the Indonesian consumer business in the fourth quarter.

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