Citigroup beats on earnings results as its bread-and-butter business shines (C)

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Thomson Reuters

Citigroup handily beat analyst estimates Thursday, reporting third-quarter earnings of $1.42 per share, a nearly 8% beat.

Wall Street estimated earnings of $1.32 per share.

“We delivered a very strong quarter, showing the balance of our franchise by both product and geography and highlighting our multiple engines of client-led growth," Citi CEO Michael Corbat said in a statement. "We had revenue increases in many of the products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses."

Here are other third-quarter highlights:

Revenues grew 2% year-over-year to $18.2 billion, beating estimates of $17.86 billion.
Net income grew 8% year-over-year to $4.1 billion, beating estimates of $3.6 billion.
The bottom line benefited from the $355 million gain on the sale of its fixed-income analytics business, which added $0.13 in earnings per share. EPS was down 2%, excluding this item.
Institutional Clients Group (ICG)— Citi’s bread and butter thanks to its global network of trading floors and multinational clients — saw revenues increase 9% year-over-year to $9.2 billion while net income increased 15% to $3 billion.
As expected, fixed-income trading took a 16% hit year-over-year, dropping to $2.9 billion from $3.4 billion.
End of period loans were $653 billion, up 2% year-over-year.
Global consumer banking net income fell 6% year-over-year to $1.17 billion as credit costs rose.

Citi’s ICG carried the bank in the third-quarter, making up for less impressive showings from its consumer unit and its corporate unit, which is winding down legacy assets and saw a net loss of $87 million on the quarter.

Every division in ICG — most of which benefit from the company’s trading floors in nearly 80 markets and giant clients that require Citi’s services on a daily basis — saw healthy growth from last year, save for fixed-income trading, which has been a battered line of business across Wall Street.

Citi

Citi and JPMorgan are kicking off the earnings cycle for US banks, which have for weeks been preparing investors for just such a blow to trading results. Bank of America, Citi, and JPMorgan have been bracing for 15% and 20% hits to trading revenues.

Citi fixed-income, currencies, and commodities trading revenues indeed fell off 16%, even as the overall markets and securities services group’s revenues increased 3% to $4.6 billion. The unit’s growth was driven by a strong equity markets showing, where revenues increased 16% to $757 million thanks to healthy business from cash equities, derivatives, and prime finance.

Investment banking revenues were up 14% from last year to $1.23 billion, but the group lost some momentum from a strong second quarter where it produced $1.5 billion in revenues — a 17% dip from the previous quarter.

Global consumer banking saw revenues grow 3% from last year to $8.4 billion, but net income dropped by 6% $1.17 billion, which the bank attributed to higher cost of credit.

Citi has beaten its EPS estimates every quarter since the start of 2014.

Elsewhere, JPMorgan beat on earnings as well, shrugging off a 27% decline in fixed-income trading.

This story is developing.

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