Citigroup reported its third-quarter results on Tuesday, surpassing Wall Street’s expectations with growth in investment banking and wealth management. However, the bank increased its reserves for potential loan losses. Before the market opened, the bank’s shares had traded higher but later fell by 4.8%.
The company reported earnings per share of $1.51, exceeding the expected $1.31, and revenue of $20.32 billion, above the forecasted $19.84 billion. The net income for the quarter declined to $3.2 billion, or $1.51 per share, from $3.5 billion, or $1.63 per share, in the previous year. This decrease in earnings was attributed to higher credit costs, including a $315 million increase in its allowance for credit losses.
Mark Mason, the Chief Financial Officer, stated during an analyst call that the bank is observing a stabilization in loan delinquencies among its retail services clients and has a strong reserve in that area. Revenue increased by 1% to $20.32 billion, driven by an 18% rise in banking revenue, particularly a 31% growth in its investment banking division. Wealth management revenue grew by 9%.
In the markets segment, equity markets revenue rose by 32% compared to the previous year, though fixed income revenue decreased by 6%. Since becoming CEO in March 2021, Jane Fraser has focused on streamlining the bank by reducing Citigroup’s global presence and workforce.
Fraser highlighted on the call that transforming the organization remains a top priority, with a closure of a longstanding consent order related to anti-money laundering systems and increased investment in areas such as data quality management. She emphasized the determination of her and her management team to successfully achieve this transformation.
Citigroup’s net interest income decreased by 3% year over year to $13.4 billion due to a shrinking margin. The net interest income, excluding the markets business, was $11.96 billion, also down from the previous year. The company expects this non-market measure to remain similar in the fourth quarter, although it did not provide guidance for net interest income in 2025.
The company successfully reduced expenses by 2% compared to the previous year and anticipates full-year expenses will align with the guidance of $53.5 billion to $53.8 billion, excluding certain regulatory costs. Citigroup’s shares have risen more than 28% year to date through Monday, outperforming both the S&P 500 and the financial sector.
Other major banks, such as Goldman Sachs and JPMorgan Chase, which have also reported their third-quarter results, exceeded earnings expectations.
