Citi surpasses expectations, posts strong APAC results
(19 October 2017 – Global) Citigroup quarterly earnings surpassed analyst expectation, as cost-cutting, a unit sale and a gain in investment bank fees compensated for weak bond trading and a jump in provisions for consumer bad debts.
Chief Executive Michael Corbat has pledged to grow profits from consumer lending to stock trading, and return tens of billions of dollars to shareholders after finally putting the United States' fourth-largest bank on a stable path following the 2007-09 financial crisis.
"We all would anticipate greater loan growth if there was a bit more clarity as far as you know when or if tax reform was going to pass," Chief Financial Officer John Gersprach told reporters.
Citigroup reported a 7.6 percent increase in net income in the third quarter. Earnings per share rose about 15 percent to US$1.42, bolstered by the bank's move to reduce its shares outstanding by seven percent.
Expenses dropped two percent. Total revenue, meanwhile, rose about two percent to US$18.17 billion, topping expectations of $17.90 billion helped in part by an increase in fees earned on share sales at Citi's investment bank and a jump in equity trading.
Overall, however, trading dropped 11 percent, dragged under by Citi's large fixed income division.
The third quarter and the year to date, the bank reported its Asia Pacific results were a strong contributor, delivering its fifth consecutive quarter of revenue growth.
Revenues in Asia were up by close to US$200 million or six percent year-on-year to US$3.6 billion and up four percent quarter-on-quarter. Net income increased by 12 percent, while Earning Before Interest and Tax (EBIT) grew by four percent to US$1.45 billion, year-on-year.
Citi says the region continues to be the largest contributor to revenue and net income outside of North America.
The bank said its wealth management unit delivered strong growth across all product lines. Gross investment sales of over US$10 billion during the quarter were the highest since mid-2015.
Citi added that ICG, its institutional businesses in Asia, delivered revenues for the quarter of US$1.7 billion, which was up six percent year-on-year and net income up 11 percent year-on-year.
According to East & Partners Asia’s Institutional Transaction Banking Markets Program, the bank continued to trail its international rivals HSBC and Standard Chartered in terms of both market and wallet share. However, positively for the bank, it is one of only four to increase wallet share over the last round of reporting, while also sharing top mindshare positions for key transaction banking positions with HSBC.