Citigroup Stock Rises. Earnings Get Lift From Release of Loan Loss Reserves and Equities Trading.

Citigroup CEO, Jane Fraser


Nicholas Kamm/AFP via Getty Images




Citigroup

was rising in premarket trading Thursday after the bank reported 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 $1.6 billion release of loan loss provisions.

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 advanced 1.4% to $71.23.

“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.”

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.

Citigroup saw declines in its trading activity. Total revenue in the 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. The bank 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.

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. 

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