Citigroup reported its third-quarter results on Friday morning, with solid growth in each institutional clients and private banking fueling higher-than-expected revenue and earnings per share.
Here’s what the corporate announced compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly often called Refinitiv:
- Earnings per share: $1.63, or $1.52 when excluding the impact of divestitures, vs. expected $1.21. Â Presently, it’s unclear if analysts included that divestitures item of their estimates.
- Revenue: $20.14 billion, vs. expected $19.31 billion
Revenue and net income rose by 9% and a couple of%, respectively, 12 months over 12 months.
Citigroup’s institutional clients unit reported $10.6 billion in revenue, up 12% 12 months over 12 months and a couple of% from the second quarter. The bank said it was one of the best third quarter prior to now decade for rates and currencies revenue.
Meanwhile, the private banking and wealth management division generated $6.8 billion in revenue, up roughly 10% 12 months over 12 months and 6% from the second quarter.
“Despite the headwinds, our five core, interconnected businesses each posted revenue growth leading to overall growth of 9%,” CEO Jane Fraser said in a press release.
Jane Fraser CEO, Citi, speaks on the 2023 Milken Institute Global Conference in Beverly Hills, California, May 1, 2023.
Mike Blake | Reuters
Despite the better-than-expected results, shares of the bank closed down 0.2% for the day. Citigroup’s stock is now down greater than 8% for the 12 months.
Amongst other banks that reported quarterly results on Friday morning, JPMorgan and Wells Fargo each showed stronger-than-expected revenue numbers of their third-quarter reports.
Citigroup reported $1.84 billion in total cost of credit at the tip of the quarter, up barely from $1.82 billion at the tip of the second quarter and $1.37 billion a 12 months ago. That metric features a net construct of $125 million within the allowance for credit losses through the third quarter. Analysts were expecting total cost of credit to achieve $1.96 billion, based on FactSet’s StreetAccount.
“The worldwide macro backdrop stays a story of desynchronization. Within the US, recent data implies a soft-landing, but history would suggest otherwise and we’re seeing some cracks within the lower [credit score] consumer. Within the euro area and the UK, the image turned distinctly more negative,” Fraser said on a call with analysts.
Friday’s earnings report includes the period during which Fraser announced the bank could be divided into five important business lines, the newest change for the CEO since taking on in March 2021. Fraser said Friday that the changes must be accomplished by early 2024 and create financial advantages down the road.
“While expense is just not the first driver of the organizational changes, they are going to help us start bending the expense curve within the fourth quarter of next 12 months,” Fraser said.
The brand new structure, announced Sept. 13, is anticipated to incorporate job cuts. CFO Mark Mason declined to present guidance on head count during Friday’s call.
Citigroup’s net interest margin for the quarter was 2.49%, above the two.41% expected, based on FactSet’s StreetAccount. Mason said that the corporate expects its 2023 full-year net interest income to are available barely above previous guidance.
One other initiative under Fraser has been Citi selling off its retail banking business in some international markets. The most recent move on that front got here on Oct. 9, when the bank announced that it had struck a deal to sell its onshore consumer wealth portfolio in China. Fraser said Friday that the bank expects to shut sale of Indonesia consumer business within the fourth quarter.
