NEW YORK: Citigroup Inc, the US bank that gets more than half its revenue from abroad, boosted profit more than analysts estimated after a drop in legal costs helped it cut expenses faster than revenue fell. The shares climbed in early trading.
Third-quarter net income rose 51% to US$4.29bil, or US$1.35 a share, from US$2.84bil, or 88 cents, a year earlier, the New York-based lender yesterday in a statement. Earnings amounted to US$1.31 a share excluding accounting adjustments, beating the US$1.27 average estimate of 26 analysts surveyed by Bloomberg.
Chief executive officer Michael Corbat, striving to meet financial goals by the end of this year, has sold assets and closed branches to shave costs and focus on affluent consumers and multinational corporations. That helped the firm weather the third quarter’s global market turmoil, which hurt revenue and profits at peers including JPMorgan Chase & Co.
“Citi is actually by some measures performing better than JPMorgan in terms of expense efficiency and capital,” David Hilder, an analyst at Drexel Hamilton LLC, said in an interview before results were reported.
Citigroup climbed 3.4% to US$52.46 at 8.12am in New York yesterday. The shares had dropped 6.3% this year through Wednesday.
Expenses fell 18% to US$10.7bil from a year earlier, while revenue slid 7.8% to US$18.5bil, excluding accounting adjustments. That’s a bit less than the average estimate of US$18.6bil in a Bloomberg survey of 18 analysts.
Trading revenue declined 10% on a slump in earnings from fixed-income products, worse than the roughly 5% drop chief financial officer John Gerspach signalled on Sept 16. That total excludes a valuation adjustment in the equities business that was booked during the third quarter.
“The quarter had more than its fair share of volatility and our results speak to the resilience of our franchise globally,” Corbat said in the statement.
Cost cuts helped Bank of America Corp boost net income to US$4.51bil from a year-earlier loss. — Bloomberg