Citigroup’s (C) profit fell 9% in the third quarter as it set aside more money for loans that might not be repaid, especially on credit cards.
The third-largest U.S. lender’s net income fell to $3.2 billion, or $1.51 per share, from $3.5 billion, or $1.63 per share, a year earlier, it said Tuesday.
“In a pivotal year, this quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining momentum,” CEO Jane Fraser said in a statement. Citi shares last rose 2% in premarket trading after the results.
Sales rose 1% to $20.3 billion.
Citi’s dealmakers joined rivals at JPMorgan Chase and Wells Fargo in benefiting from a recovery in capital markets as corporate clients issued more debt and equity.
Investment banking was a bright spot for the second quarter in a row, with revenue rising 31% to $934 million. Wall Street executives are optimistic that the Federal Reserve’s rate cut last month will pave the way for more deals and initial public offerings.
Services revenue rose 8% to $5 billion, driven by a 24% increase in securities services revenue to $1.4 billion.
A stock market rally at the end of the quarter saw stock trading revenues rise 32% to $1.2 billion, pushing total market revenues up 1%.
But revenue from bond trading lagged, falling 6% to $3.6 billion.
In the US retail banking division, revenue rose 3% to $5 billion, supported by 8% growth in credit card revenues to $2.7 billion.
Meanwhile, retail banking revenues fell 8%, and in the retail services business dealing with credit card partnerships, revenue fell 1%.
Citi’s total provision for credit losses was about $22.1 billion at the end of the third quarter, compared with $20.2 billion a year earlier.
The asset management division, a key part of Fraser’s growth strategy, posted revenue growth of 9% to $2 billion in the quarter.
Fraser has sought to increase profits, simplify the business and solve long-standing regulatory problems.
On Friday, Bank of America’s third-quarter profit fell due to lower interest income. Earnings at rival JPMorgan Chase and Wells Fargo exceeded expectations last week, buoyed by strong consumer finances.
REGULATORY EFFORTS
In 2020, the Office of the Comptroller of the Monetary Affairs and the Federal Reserve fined Citi $400 million and ordered the bank to fix persistent deficiencies in risk management and data management.
Total operating expenses fell by 2% in the third quarter.
Regulators fined Citi again in July for failing to make sufficient progress on these issues. Some relief came when the Federal Reserve earlier this month ended a 2013 enforcement action involving the bank’s anti-money laundering programs.
Citi is paying special attention to data, an area “where we got feedback that we weren’t moving fast enough,” Chief Financial Officer Mark Mason told investors in September.
It has tasked technology head Tim Ryan with working with Chief Operating Officer Anand Selva to solve the bank’s long-standing data management issues. The bank has also added a section to its quarterly returns to address its work on the multiple regulatory fines known as consent orders.
Shares of Citi are up 28% so far this year, while an index that tracks major banks is up 25% and the S&P 500 index is up 23% over the same period.
(Reporting by Tatiana Bautzer in New York and Manya Saini in Bengaluru, Editing by Lananh Nguyen and Devika Syamnath)
