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Citigroup Q3 Profit Up 12%, Beats View; But Revenues Miss

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Citigroup Inc. (C) on Friday reported a 12 percent increase in profit for the third quarter from last year, as slightly lower revenues were more than offset by a lower tax rate as well as decline in cost of credit and expenses.

Earnings per share beat analysts' expectations, while revenues missed their estimates. The company's shares are rising more than 2 percent in pre-market activity.

Citigroup's third-quarter net income rose to $4.62 billion or $1.73 per share from $4.13 billion or $1.42 per share in the year-ago period.

On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $1.69 per share. Analysts' estimates typically exclude special items.

Total revenues for the quarter declined to $18.39 billion from $18.42 billion in the prior-year period. Analysts expected revenue of $18.45 billion.

Revenues were largely unchanged from the prior-year period, primarily reflecting the net impact of a bigger one-time gain in the year-ago period compared to the latest quarter, in addition to the impact of foreign exchange translation.

Citigroup's effective tax rate was 24 percent in the quarter, compared to 31 percent in the prior-year period.

Revenues from Institutional Clients Group declined 2 percent from last year to $9.24 billion, reflecting a 1 percent increase in banking revenue and 5 percent decrease in markets and securities services.

However, fixed income markets revenue rose 9 percent, with contribution from both rates and currencies as well as spread products. Equity Markets revenue rose increased 1 percent, as strength in prime finance and derivatives was largely offset by lower revenues in cash equities due to a more challenging trading environment and lower commissions.

Global Consumer Banking revenues increased 2 percent to $8.65 billion, while Corporate/Other revenue declined 5 percent from last year to $494 million.

Total operating expenses declined 1 percent to $10.31 billion, as higher volume-related expenses and investments were more than offset by efficiency savings and the wind-down of legacy assets.

Citigroup's cost of credit decreased 1 percent from last year to $1.97 billion, primarily driven by lower reserve builds in CitiRetail Services and Citi-Branded Cards in North America GCB, partially offset by a net reserve build in ICG.

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