Published: Fri, October 13, 2017
Business | By Max Garcia

Citigroup Inc (C) Q3 Earnings Beat, Despite Very Weak Fixed Income Performance

Analysts had, on average, estimated earnings per share of $1.32, according to Thomson Reuters I/B/E/S.

"We had revenue increases in numerous products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses". The bank had to set aside more money to cover bad loans like in the bank's credit card division.

Shares in both banks were down slightly in early trade.

Citi-branded cards in the US provide about 10 percent of Citigroup revenue and profits and are seen by Corbat as one of the company's best shots at growing profits.

In the latest U.S. economic data, a Labour Department report showed its producer price index for final demand climbed 0.4 percent in September, following a 0.2 percent increase in August. At $1.42 a share, earnings topped the consensus estimate of Wall Street analysts of $1.32 a share.

Citigroup's investment bank was the driver of the bank's profit growth in the quarter, despite a notable drop in bond trading revenue.

Quarterly consumer banking revenue increased 3% globally from a year ago, to $8.43 billion, led by a 10% gain in Mexico.

Despite its revenue increasing 2% year-over-year, the company notes there were some black marks in its earnings report.

Hopes are fading that U.S. President Donald Trump will be able to stimulate bond trading activity and boost demand for loans through a yet-to-materialize tax overhaul and loosening in financial regulations.

Overall, Citi's trading performance was still better than expected and bested rival JPMorgan which saw a 27 percent slide in bond trading compared with the 16 percent drop at Citi.

And the trend bodes poorly for Goldman Sachs Group Inc, which has recently struggled more in that area than other Wall Street banks.

JPMorgan's markets revenue is likely to drop again in the fourth quarter because the year-ago period was strong, Chief Financial Officer Marianne Lake said on a conference call with analysts.

Still, management maintained earlier guidance for full-year net interest income, expenses, charge-offs and loan growth, indicating that they expect JPMorgan's other businesses to continue to offset capital markets pain.

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