Citigroup's Profit Rises, Helped by Cost Cuts -- 2nd Update

Date : 10/12/2018 @ 9:55AM
Source : Dow Jones News
Stock : Citigroup, Inc. (C)
Quote : 68.98  0.36 (0.52%) @ 2:32PM

Citigroup's Profit Rises, Helped by Cost Cuts -- 2nd Update

Citigroup, Inc. (NYSE:C)
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By Telis Demos 

Citigroup Inc. said Friday its third-quarter profit rose 12% from a year ago, as the company cut expenses and reduced its tax bill amid flat revenue growth.

Quarterly profit at the New York-based bank was $4.62 billion, up from $4.13 billion a year earlier. Per-share earnings were $1.73. Analysts polled by Refinitiv had expected $1.69 a share.

Revenue was down slightly to $18.39 billion, from $18.42 billion a year ago. Analysts had expected $18.46 billion.

Third-quarter trading revenue rose 7% to $3.99 billion from $3.72 billion, led by a 9% gain in fixed-income trading results. Chief Financial Officer John Gerspach said in September that he expected trading revenue overall to be flat or slightly higher in the third quarter.

Yet despite the trading boost, big companies weren't as eager to tap the market. Investment-banking revenue decline 8%, to $1.18 billion, thanks to reduced corporate activity such as stock and bond issuance.

Overall institutional client revenue was off by 2% from a year ago, reflecting in part the absence of last year's gain from the sale of a fixed-income data business. The bank's treasury and trade solutions business, which serves big companies as they move money around the world, was up 4% from a year ago.

Quarterly revenue at Citigroup's global consumer bank rose 2%, with the biggest change in Mexico, which was up 20% from a year ago, in part due to the sale of an asset-management unit. North American consumer-banking revenue was down by 1%.

The bank's U.S. consumer business will likely be a focus, after a series of management changes in the unit this year, and as analysts and investors aim to understand how rising interest rates will impact the bank's giant credit-card arm and evolving deposit business.

The new team faces an uphill climb by some measures. Retail deposits at the bank were down slightly from a year ago, to $307 billion from $308 billion. Citigroup this year said it was launching a national digital bank to expand its U.S. retail presence after shrinking the number of cities where it has branches over the past several years.

Citigroup card revenue fell 3% from a year ago, to $2.2 billion, even as card purchases rose 9% and net interest revenue grew 2%. The bank has been working to retain customers who were offered promotional zero-interest balances, an increasingly costly strategy as rates rise.

Overall, the bank's loan book grew 3% from a year ago, to $675 billion. Net credit losses fell 1% to $1.76 billion.

Quarterly expenses were down 1% from a year ago. The company's tax provision was 21% lower, the consequence of a major U.S. corporate tax cut in 2017.

The bank continued its strategy to return some of its capital to shareholders, as a way to boost its overall returns.

Citigroup bought back 8% of its stock, which helped the bank achieve a return on equity of 9.6%. That is still shy of the 10% hurdle most banks seek to clear but well above the 7.3% mark a year earlier.

Write to Telis Demos at telis.demos@wsj.com

 

(END) Dow Jones Newswires

October 12, 2018 09:40 ET (13:40 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.

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