Citigroup's shares edged higher in premarket trading Tuesday after the bank reported third-quarter results that topped Wall Street expectations, driven by robust growth in its services and wealth divisions.
The lender posted revenue of $23.85 billion for the quarter, slightly above the $23.72 billion analysts had projected. Net income climbed 38% year over year to $5.25 billion, or $2.85 per share, compared with $3.8 billion, or $1.86 per share, in the same period last year.
Shares initially dipped about 1% when the numbers were released but recovered to trade roughly 0.5% higher before the opening bell. The stock has gained 13% so far this year, outperforming the broader bank stock index.
Strongest third-quarter revenue in a decade
Citigroup said the quarter delivered its highest third-quarter revenue in a decade, alongside improved returns and positive operating leverage. The bank reported a return on tangible common equity (ROTCE) of 11.5% for the quarter and 12.6% for the year to date, ahead of its 11% target.
“Our performance in the quarter, which included the best third-quarter revenue in a decade, positive operating leverage and meaningful improvement in our returns, reflects the continued disciplined and consistent execution of our strategy,” CEO Jane Fraser said in a statement.
Services and wealth lead growth
Among the bank's five major segments, Services was the strongest-growing business, with revenue up 15% to $6.6 billion, supported by momentum in Treasury and Trade Solutions and Securities Services. Profit in the division rose 27%.
Wealth also delivered double-digit growth, with revenue up 15% to $3.3 billion, reflecting broad-based gains across Citigold, retail banking, and the private bank. Client assets saw a similar increase.
Markets revenue increased 6% to $6.1 billion, with equity markets revenue climbing 14% and fixed-income markets revenue up 4%. Banking revenue rose 6% to $1.7 billion, including loan hedges, while investment banking revenue grew 9% to $1.35 billion, driven largely by equity capital markets activity.
US Consumer Cards revenue remained flat at $4.7 billion, as higher net interest income was offset by a decline in non-interest revenue.
Mixed trends in investment banking
Investment banking revenue rose 9% from a year earlier but fell 13% from the second quarter as equity and debt underwriting activity slowed. Equity underwriting revenue declined 19% sequentially, although it remained 77% higher than in the same quarter last year.
Net income also declined 10% from the second quarter, reflecting the sequential pressure in investment banking and underwriting.
Citigroup's results capped off a mixed day for major banks reporting on Tuesday. JPMorgan missed Wall Street estimates, and Wells Fargo posted revenues below expectations, while Goldman Sachs exceeded forecasts. Banking stocks have been under pressure recently, with a sharp rise in bond yields raising concerns about a drop in borrowing.
This article is for informational purposes only and does not constitute financial advice.
