Citigroup Inc posted its third-quarter profits this week, showing that they have actually beat analyst’s estimates, perhaps as a result of revenue surging 35 percent over the same period last year as well as healthy interest rates and currency trading.
On Friday, then, the bank reported a higher income of $3.84 billion, which pumped shares up $1.24. This beat the estimate of $1.15 per share but is still down 11 percent from a year earlier.
In light of the report, Citi CEO Michael Corbat shared, “I am very encouraged by the underlying momentum across our franchise, notably in several areas where we have been investing. In the quarter, both our Global Consumer Bank and Institutional Clients Group had solid year-over-year revenue increases in nearly every business line and geography. We also continued to grow core loans and deposits while reducing non-core assets to just 3% of our balance sheet.”
With that he also notes that the bank will now remain focused on shareholder return. He goes on to comment that acquisition of Costco’s portfolio in addition to the sale of retail operations in Argentina and Brazil—which was just announced—are only the latest examples of how the company is shifting its priorities.
More specifically, he goes on to explain “Our Common Equity Tier 1 ratio increased to 12.6% and we remain committed to consistently increasing the amount of capital we return to our shareholders in order to improve overall returns. In the past two years, we have lowered the amount of outstanding common shares by 180 million or 6%. Our Tangible Book Value per share increased to $64.71 in the quarter, an 8% increase from one year ago, reflecting both the impact of these stock repurchases and our efforts to deliver quality and consistent earnings.”
Citigroup—and its competitors—have long awaited the end of the fixed-income trading slump that dramatically cut Wall Street profits over the past few years, cutting jobs in the process.
In addition, Citibank Chief Financial Officer John Gerspach notes that even though the Brexit vote motivated a few more corporate clients, last quarter, the third quarter rate debate encouraged more engagement from investor clients. He says, “that led to spread product revenues being up significantly. The nice thing about the Fed is, depending upon who spoke when, you got a different view of which way rates were going. ”