Cash equities, underwriting help Citi to Q3 earnings beat

Alexander Bueso Sharecast | 12 Oct, 2017 14:38 - Updated: 14:38 | | |

citi
  • 73.75
  • 0.29%0.22
  • Max: 74.01
  • Min: 73.48
  • Volume: 6,961,682
  • MM 200 : n/a
20:00 23/10/17
  • 2,569.64
  • 0.29%7.54
  • Max: 2,578.29
  • Min: 2,569.63
  • Volume: 0
  • MM 200 : n/a
20:00 23/10/17
  • 1,132.54
  • 0.16%1.83
  • Max: 1,136.51
  • Min: 1,132.53
  • Volume: 0
  • MM 200 : n/a
20:00 23/10/17

Citigroup managed to beat the Street consensus for the third quarter on the back of a solid performance by its cash equities and stock underwriting businesses.

For the three months ending in September, the lender clocked in with earnings per share of $1.42, besting analysts' estimates for profits of $1.32.

Revenues also printed ahead of forecasts, coming in at $18.2bn versus expectations of $17.9bn.

Commenting on the lender's latest set of results, chief Michael Corbat said: "We had revenues in many of the products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses."

From a bird's eye view, global consumer banking revenues were up 3% year-on-year to reach $8.43bn and by 9% at its institutional client group to $9.23bn, but corporate revenues cratered 55% to $509m reflecting the wind-down of legacy assets.

Credit losses were up by 17% on the year to $1.77bn, offset by a 2% fall in operating expenses to $10.2bn.

On a positive note, Citi's common equity Tier 1 ratio improved from 12.6% in the year-earlier quarter to 13.0%.

Within ICG, Banking revenues jumped 16% to $4.6bn, helped in part by hedges on loans and a 14% rise in investment banking income to $1.2bn - with equity underwriting making a "particularly" solid contribution.

Also in ICG, in the closely-watched Markets and Securities Services unit, revenues rose 3% to $4.6bn, with improved sales at its Securities Services arm and the proceeds from the sale of a fixed income analytics unit more than compensating for lower Markets revenues.

Versus the same period of 2016, fixed income Markets revenues declined 16%, with Citi laying the blame at the feet of low levels of volatility, which led to lower revenues from G-10 rates and currencies.

Heightened activity a year earlier on the heels of Brexit also made for a difficult base for comparison.

On the other hand, equity markets revenues improved 16% to $757m thanks to growth in the cash equities business.

As of 1409 BST, shares of Citi were up 0.73% to $75.49.

More news

19:51 Europe close: Catalan uncertainty weighs on stocks, focus shifts to voter polls

Europe's main equity benchmarks ended the session mostly higher, albeit off their best levels, amid optimism regarding prospects for tax reform in the States, even as investors kept tabs on the political ructions down in Spain, including some of the most recent and perhaps somewhat unexpected developments.

17:23 London close: Stocks end little changed despite weak reading on industry

London stocks reversed an earlier small loss to trade slightly higher by the close of trading on Monday despite resilience in the pound against the greenback even after the release of weaker-than-expected data on industrial trends.

16:30 Tuesday preview: Results from Anglo American, Bunzl, St James's Place and Whitbread

Tuesday remains quiet for macroeconomic news but the week's major corporate results kick in with updates from Anglo American, Bunzl, St James's Place and Whitbread.

15:50 FTSE 250 movers: Spire surges as it rejects Mediclinic offer; IWG hit by downgrade

London’s FTSE 250 was down 0.2% to 20,109.57 in afternoon trade on Monday.

15:47 FTSE 100 movers: GKN rallies but Mediclinic drops as Spire rejects offer

London’s FTSE 100 was up 0.1% to 7,529.60 in afternoon trade on Monday.

15:33 US open: Stocks pause at record highs

Wall Street was trading on a mixed note in the early going on Monday, albeit after record closes during the previous session with sentiment underpinned by optimism over Trump’s tax plans as investors look ahead to more earnings releases.

15:04 Smith & Nephew acquires 'game changing' shoulder surgery technology

Smith & Nephew has agreed to snap up a US developer of a "game changing" surgical technology that helps speed the healing process in rotator cuff shoulder injuries.

15:11 FCA still investigating RBS's GRG over SME issues

The City watchdog has published an interim report into the treatment by Royal Bank of Scotland small business clients, though it said the bank remained under investigation over some unnamed matters that could see further regulatory action.

14:02 Asia report: Japan leads rise as Abe consolidates strength in election

Japanese equities led Asia-Pacific markets mostly higher on Monday as markets welcomed an election win for Shinzo Abe.

13:28 UK household pressures ease, rate hike expectations rise - IHS Markit

Financial pressures eased for UK households in October while rate hike expectations rose, according to the latest survey from IHS/Markit.