said on Thursday its third-quarter profit rose 48%, after the bank freed up some of the money it set aside for bad debts at the start of the pandemic.
The bank reported earnings of $ 4.64 billion, or $ 2.15 per share, from $ 3.15 billion, or $ 1.36 per share, a year earlier. That beat the $ 1.71 per share that analysts were expecting, according to FactSet.
Revenue fell 1% to $ 17.15 billion, better than analysts expected $ 16.98 billion. Excluding the sale of its Australian consumer business, sales would have been up 3%.
In the institutional client group, the strong investment bank offset a decline in transactions, and revenue rose 4% to $ 10.79 billion. In consumer banking, revenues fell 13% to $ 6.26 billion, affected by the Australian deal.
Citigroup released $ 1.16 billion that it set aside last year to cover defaults. A year ago, the bank was still building up reserves and took over $ 2 billion on credit. JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. also freed up some of their funds for rainy days, boosting quarterly profits.
Citigroup’s results are heavily tied to Wall Street, which has seen some of its best quarters over the past year. Firms turned to Citigroup bankers to help them raise funds, sell bonds and close deals, as vibrant markets led to active trading.
Investment banking fees rose 39%, with a record pace of global mergers bringing advisory fees to $ 539 million, more than triple the previous year. Debt subscription and share subscription fees increased by 19% and 5% respectively.
But trading volumes slowed for fixed income assets, as expected, hurting third quarter results across the industry. Citigroup’s trading revenues fell 5%, matching rival JPMorgan. Citigroup’s fixed income income fell 16%, while equity income rose 40%.
Low interest rates and the continued lack of loan growth stung Citigroup’s consumer bank. Spending on Citigroup credit cards increased 20% from a year ago and continued to rise from the summer. But customers continued to pay the fees, and card loans were down 2% from a year ago.
The bank’s profit on loans, known as net interest income, fell 1% to $ 10.4 billion in the quarter. Total loans were stable from the previous year and down from June.
Managing Director Jane Fraser, in her eighth month on the job, is working on strategic plans to increase Citigroup’s profitability and to meet demands from regulators that the bank improve its risk management systems. This work shed light on the bank’s spending, which increased by 5%, in line with expectations.
Shares rose 0.8% on Thursday. The stock underperformed the big rival banks this year, up about 15%.
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Appeared in the print edition of October 15, 2021 under the title “Citi Earnings Soar 48% as Rainy-Day Cash Is Freed”.