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Citigroup Q3 Profit Up 8%, Results Beat View


Citigroup Inc. (C) on Thursday reported an 8 percent increase in profit for the third quarter from last year, reflecting higher revenues and lower expenses that more than offset higher cost of credit. Both revenue and earnings per share for the quarter beat analysts' estimates.

Citigroup's third-quarter net income rose to $4.13 billion or $1.42 per share from $3.84 billion or $1.24 per share in the year-ago period.

The latest quarter's results include a gain of $580 million pre-tax, or $355 million after-tax, on the sale of a fixed income analytics business, which contributed $0.13 to earnings per share.

Excluding the gain, net income declined 2 percent, reflecting higher cost of credit. Earnings per share rose 4 percent, driven by a 7 percent reduction in average diluted shares outstanding.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $1.32 per share. Analysts' estimates typically exclude special items.

Revenues for the quarter grew 2 percent to $18.17 billion from $17.76 billion in the prior year. Analysts expected revenue of $17.9 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 primarily due to the continued wind-down of legacy costs.

Revenues from Institutional Clients Group rose 9 percent to $9.23 billion, reflecting a 16 percent increase in banking revenue and 3 percent growth in markets and securities services.

However, Fixed income markets revenue decreased 16 percent due to lower volatility in the quarter and lower activity in spread products, while equity markets revenue grew 16 percent.

Global Consumer Banking revenues increased 3 percent to $8.43 billion, while Corporate/Other revenue fell 55 percent from last year to $509 million.

The company's total operating expenses declined 2 percent from the year-ago period to $10.17 billion, as higher volume-related expenses and ongoing investments were more than offset by efficiency savings and the wind-down of legacy assets.

Citigroup's cost of credit rose 15 percent from last year to $1.99 billion, driven by an increase in net credit losses of $252 million and higher loan loss reserve build of $16 million that included about $100 million of hurricane and earthquake-related loan loss reserve builds.

The company's Common Equity Tier 1 capital ratio grew to 13.0 percent from 12.6 percent in the year-ago period.

by RTTNews Staff Writer

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