Citigroup C shares recovered in premarket trading Tuesday as the bank reported stronger-than-expected third-quarter results, with revenue beating Wall Street estimates and profit climbing 40% from a year earlier.
The stock was down around 1% when the results were announced but eventually gained around 0.5% before the opening bell as the lender reported another quarter of solid growth across several businesses.
Citi shares have gained 13% this year, outperforming the broader bank stock index.
Citigroup reported third-quarter revenue of $23.85 billion, exceeding analyst expectations of approximately $23.72 billion.
Net income reached $5.25 billion, or $2.85 per share, compared with $3.8 billion, or $1.86 per share, in the same period last year.
Citi reports strongest third-quarter revenue in a decade
Citigroup said the quarter delivered its highest third-quarter revenue in a decade, alongside improved returns and positive operating leverage.
Services was the strongest-growing business among the bank’s five major segments, with revenue increasing 15% and profit rising 27%.
Wealth also delivered double-digit growth, with revenue up 15% and client assets seeing a similar increase.
Citi reported a return on tangible common equity (ROTCE) of 11.5% for the quarter and 12.6% for the year to date, putting it ahead of its 11% target.
“Our performance in the quarter, which included the best third-quarter revenue in a decade, positive operating leverage and meaningful improvement in our returns, reflects the continued disciplined and consistent execution of our strategy,” Citi Chair and CEO Jane Fraser said.
Services and wealth lead business growth
Citigroup’s Services division generated $6.6 billion in revenue, up 15% year over year, supported by momentum in Treasury and Trade Solutions (TTS) and Securities Services.
Markets revenue increased 6% to $6.1 billion. Equity markets revenue climbed 14%, while fixed-income markets revenue grew 4%.
The Banking division recorded revenue of $1.7 billion, including loan hedges, an increase of 6%. Investment banking revenue rose 9%, driven largely by equity capital markets activity.
Wealth revenue rose 15% to $3.3 billion, reflecting broad-based growth across Citigold, retail banking and the private bank.
Meanwhile, US Consumer Cards revenue remained unchanged at $4.7 billion. Higher net interest income was offset by a decline in non-interest revenue.
Investment banking and equity underwriting show mixed trends
Citigroup’s investment banking revenue reached $1.35 billion, up 9% from a year earlier.
However, it fell 13% from the second quarter as equity and debt underwriting activity slowed.
Equity underwriting revenue declined 19% sequentially, although it remained 77% higher than in the same quarter last year.
Also, net income declined 10% from the second quarter, while investment banking and equity underwriting revenues faced sequential pressure.
Citigroup’s results capped off a mixed day for banking giants who released results on Tuesday.
JP Morgan missed Wall Street estimates, and Wells Fargo also posted revenues below analysts’ expectations.
Goldman Sachs, by contrast, exceeded Wall Street expectations, with Citigroup also coming up with a positive result.
Banking stocks have been under pressure in recent times, with a sharp rise in bond yields raising concerns about a drop in borrowing.
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