- Citigroup on Tuesday reported second-quarter earnings that beat analyst estimates for revenue and profit.
- The bank’s trading desks failed to offset its struggling consumer banking arm, but performed well enough to surprise Wall Street to the upside.
- Citi shares gained as much as 2% in early Tuesday trading.
- Watch Citigroup trade live here.
Citigroup reported third-quarter results on Tuesday that beat estimates for revenue and profit.
The bank’s trading division once again offset a slump in profits driven by near-zero interest rates and reserve build-ups. Revenue fell 7% from the year-ago period as thriving trading desks fell short of offsetting a consumer banking slump. Increased loan-loss reserves led net income to tank 34% from the year-ago period.
Citigroup shares gained as much as 2% in early Tuesday trading.
Here are the key numbers:
- Revenue: $17.3 billion, versus the $17.2 billion estimate from analysts surveyed by Bloomberg
- Adjusted earnings per share: $1.40 per share, versus the 92 cent estimate
- Net income: $3.2 billion, versus the $1.8 billion estimate
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Global Consumer Banking revenues fell 13% to $7.2 billion as client spending remained stifled.
“We continue to navigate the effects of the COVID-19 pandemic extremely well. Credit costs have stabilized, deposits continued to increase, and revenues are up 3% year-to-date,” CEO Michael Corbat said in a statement. “Although Global Consumer Banking revenues remained lower as a result of the pandemic, we did see higher activity in our mortgage and wealth management products.”
Net credit losses climbed roughly 200% from the year-ago period to $329 million. The bank’s reserves for soured loans grew 111% from the year-ago period to $26.4 billion, or 4% of loans.
The bank’s third-quarter figures reveal continued strength as the financial sector rebounds from the pandemic’s economic fallout. The quarter saw the US relax more lockdown measures before a second wave of infections prompted some fears of resumed quarantines. Several gauges of economic growth moderated their pace of improvement, leaving some looking to Congress to reinvigorate the recovery with another stimulus measure.
Citi’s second-quarter results bore the brunt of the coronavirus’ hit, with net income contracting 73% from the year-ago period. Still, earnings and revenue beat expectations as the company’s outperforming trading desks offset losses in its consumer banking arm.
The Tuesday report kicks off an earnings season set to reveal how companies performed through the slowing bounce-back. JPMorgan – the first major bank to report – beat expectations for revenue and profit over the period as the rebound in global markets boosted earnings.
Citi closed at $45.88 per share on Monday, down roughly 42% year-to-date.
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