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Citigroup CEO, Jane Fraser

Nicholas Kamm/AFP via Getty Images


Citigroup

stock was fluctuating after the bank posted third-quarter earnings that topped analysts’ expectations.


Citigroup

(ticker: C) reported an adjusted profit of $2.15 a share on revenues of $17.2 billion, beating forecasts for $1.71 a share on revenues of $16.9 billion.

Boosting profits was a $1.16 billion release of loan loss provisions as economic conditions improved.

The bank reported earnings of $1.40 a share a year earlier on revenues of $17.3 billion. Net income was $4.6 billion, up from $3.1 billion in the year-ago quarter.

Shares of Citigroup were down 0.2% at $70.15.

“Overall, I am quite pleased with $4.6 billion in net income given the environment we are operating in,” said CEO Jane Fraser in a statement. “While we have much work ahead, we are getting results from the investments we have been making and seeing both the strength and durability of our franchise.”

The bank’s upside was largely revenue-driven, and benefited from better credit costs than forecast, said Credit Suisse analyst Susan Katzke in a Thursday research note.

Average deposits increased 2% quarter over quarter, non-accrual loans were down 9% quarter over quarter, and the loan loss reserve release was less than the $1.4 billion the analyst estimated. She maintained her Outperform rating and $82 target price on the stock.

Citigroup saw better-than-anticipated growth from its Institutional Clients Group, which raked in $10.8 billion—a 4% year-over-year increase. Growth was especially strong in investment banking, equity markets and securities services. Investment banking revenue increased by nearly 40% to $1.9 billion, up from $1.3 billion last year.

The bank’s wealth management sector also showed momentum, Fraser said. Private banking revenues increased by 4% year over year.

Trading activity declined this quarter. Total revenue in the bank’s trading division came in at $5 billion, marking a 4% year-over-year decrease. Fixed income trading saw a 16% drop, which the bank said was due to lower rates and spread products.

Equities trading increased by 40% to generate $1.2 billion in revenues, driven by derivatives, prime finance and cash equities. 

Overall operating costs increased by 5%, driven by increased investments in Citi’s pivot toward business-led investments such as wealth management, treasury and trade, and its commercial bank. 

The bank’s global consumer banking unit saw an 8% drop in revenue, bringing in $6.2 billion. Citigroup attributed the drop to the sale of its Australia consumer business, which created a pretax loss of approximately $680 million.

Citigroup previously announced it would pursue exits from consumer franchises in 13 markets in Asia and EMEA and focus instead on scaling in four wealth centers: Singapore, Hong Kong, the UAE, and London.

Citigroup will be holding a conference call at 10 a.m. Eastern.

Three other major banks reported earnings Thursday, including


Bank of America

(BAC),


Wells Fargo

(WFC), and


Morgan Stanley

(MS). JPMorgan Chase (JPM) reported earnings Wednesday. 

The

KBW Nasdaq Bank Index
was rising 0.2% Thursday. The

Dow Jones Industrial Average
was up 1.1%, and the

S&P 500
gained 1%.

Write to Sabrina Escobar at sabrina.escobar@barrons.com

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