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Citigroup Q2 Profit, Revenue Beat Estimates

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Citigroup Inc. (C) on Friday reported a 3 percent decrease in profit for the second quarter from last year, as an increase in revenues was more than offset by higher cost of credit and operating expenses. However, both revenue and earnings per share for the quarter beat analysts' estimates. 

Citigroup's second-quarter net income declined to $3.87 billion from $4.00 billion or reported in the same period last year. However, earnings per share increased to $1.28 from $1.24 in the year-ago period, driven by a 6 percent reduction in average diluted shares outstanding.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $1.21 per share. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 2 percent to $17.90 billion from $17.55 billion in the prior year. Analysts expected revenue of $17.37 billion for the quarter.

The increase in revenues were driven by growth in both the Institutional Clients Group and Global Consumer Banking segments, partially offset by lower revenues in Corporate/Other segment due to the continued wind-down of legacy assets.

Revenues from Institutional Clients Group rose 6 percent, reflecting a 13 percent increase in banking revenue, while markets and securities services revenues declined 5 percent. Fixed income markets revenue decreased 6 percent, while equity markets revenue fell 11 percent.

Global Consumer Banking revenues increased 5 percent, while Corporate/Other revenue fell 45 percent from last year.

The company's total operating expenses rose 1 percent from the year-ago period to $10.51 billion. 

Citigroup's cost of credit in the quarter rose 22 percent from last year to $1.72 billion, driven by an increase in net credit losses of $94 million and a net loan loss reserve release of $16 million. This compares to a net release of $256 million mostly related to legacy assets in the prior year period.

The company noted that its Common Equity Tier 1 capital ratio grew to 13.0 percent, well above the 11.5 percent required to prudently operate the firm.

by RTT Staff Writer

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