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Citigroup posted better than expected results before the market with $C revenues from its fixed-income, currency and commodities trading division getting a boost from higher rates during the quarter. $C reported after other money center banks Bank of America $BAC JPMorgan Chase $JPM, Wells Fargo $WFC, PNC Financial $PNC and Goldman Sachs.

Citigroup

Citigroup Inc NYSE: C · Report Before Open Tuesday

$1.97 Beat $1.95 EPS Forecast And $18.60 Beat $18.545 billion Forecast in Revenue

Earnings

Citgroup posted third quarter earnings of $1.97 per share vs $1.95 per share expected by Refinitiv and revenue of $18.6 billion vs $18.545 billion forecast. itigroup’s earnings of $1.97 per share excludes a tax benefit of 10 cents per share. The bank’s revenues from its fixed-income, currency and commodities trading division got a boost from higher rates during the quarter as well as “improved activity” with corporate and investor clients, Citigroup says. Citigroup is one of the least rate sensitive banks of the majors has said a 25-basis point rate shift would cut revenue by $50 million per quarter.

Analysts focus on the bank’s cost-ratio outlook for 2019. With the recent market turmoil there will be eyes on variables including geopolitics, loan growth, capital markets revenue and expense outlooks. 

Given that, in the conference call management’s take on the economy, global economic growth and the health of capital markets will be scrutinized. Indications about card margins and growth in North America retail banking with updates on the firm’s national digital bank and its growth prospects in Mexico and Asia are all key data points. Given the market risks and the Fed's so called more flexible policy look for investment banking pipeline talk and credit quality.

Citigroup Inc NYSE: C

Market Reaction Pre-market $71.22 +1.39 %

Highlights

  • Fixed-income, currency and commodities trading revenue: $3.211 billion vs $3.09 billion expected by StreetAccount.
  • Net interest income: $11.64 billion vs $12.15 billion expecte, the company’s lending business posted weaker-than-forecast results, Analysts polled by StreetAccount expected net interest income of $12.15 billion.
  • Net interest margin, meanwhile, came in at 2.56% for the quarter. That’s below a 2.66% forecast
  • Revenue rose by 1% to $18.57 billion driven by the gain on the sale of an asset management business in Mexico in Global Consumer Banking (GCB). Excluding the gain on sale, revenues increased by 2% reflecting solid performance across both GCB and the Institutional Clients Group (ICG).
  • ICG revenues rose by 3%. The strong client engagement and growth in transaction volumes drove Treasury and Trade Solutions revenue higher.
  • The continued strength in debt underwriting and solid results in advisory, particularly in EMEA, drove Investment Banking.
  • The higher lending and deposit volumes as well as higher investment activity, with both new and existing clients, led to higher Private Bank revenues.

Loans and Assets

  • Citigroup’s allowance for loan losses increased to $12.5 billion at quarter-end from $12.3 billion at the end of the prior-year period.
  • Total non-accrual assets fell by 6% to $3.8 billion.
  • Consumer non-accrual loans dropped by 8% to $2.2 billion and corporate non-accrual loans declined by 1% to $1.5 billion.
  • The end-of-period loans grew by 4%, excluding the impact of foreign exchange translation, driven by 5% aggregate growth in ICG and GCB. In constant dollars, Citigroup’s end-of-period deposits increased 9% driven by 11% growth in ICG and 5% growth in GCB.

Citigroup Q3 2019 Earnings

CEO Michael Corbat said the strength of the U.S. consumer, noting branded-cards revenue expanded by 11% in North America during the third quarter. “Despite an unpredictable environment throughout the quarter, we continue to deliver on our strategy of improving shareholder returns through consistent, client-led growth while also executing against our capital plan,”

 

Caution hangs over the sector as auto and student loans also overhang the banking and finance sectors.  The new fall in home prices has challenged optimism for the mortgage business and banks profits thereto.

Source: Citigroup

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