Citigroup (C) Q3 earnings report

Citigroup reported its third-quarter results on Friday morning, with solid growth in both institutional clients and personal banking fueling higher-than-expected revenue and earnings per share.

Here’s what the company announced compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

• Earnings per share: $1.63, or $1.52 when excluding the impact of divestitures, vs. expected $1.21.  At this time, it is unclear if analysts included that divestitures item in their estimates.
• Revenue: $20.14 billion, vs. expected $19.31 billion

Revenue and net income rose by 9% and 2%, respectively, year over year.

Citigroup’s institutional clients unit reported $10.6 billion in revenue, up 12% year over year and 2% from the second quarter. The bank said it was the best third quarter in the past decade for rates and currencies revenue.

Meanwhile, the personal banking and wealth management division generated $6.8 billion in revenue, up roughly 10% year over year and 6% from the second quarter.

“Despite the headwinds, our five core, interconnected businesses each posted revenue growth resulting in overall growth of 9%,” CEO Jane Fraser said in a press release.

Despite the better-than-expected results, shares of the bank closed down 0.2% for the day. Citigroup’s stock is now down more than 8% for the year.

Among other banks that reported quarterly results on Friday morning, JPMorgan and Wells Fargo both showed stronger-than-expected revenue numbers in their third-quarter reports.

Citigroup reported $1.84 billion in total cost of credit at the end of the quarter, up slightly from $1.82 billion at the end of the second quarter and $1.37 billion a year ago. That metric includes a net build of $125 million in the allowance for credit losses during the third quarter. Analysts were expecting total cost of credit to reach $1.96 billion, according to FactSet’s StreetAccount.

“The global macro backdrop remains a story of desynchronization. In the US, recent data implies a soft-landing, but history would suggest otherwise and we are seeing some cracks in the lower [credit score] consumer. In the euro area and the UK, the picture turned distinctly more negative,” Fraser said on a call with analysts.

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Friday’s earnings report includes the period during which Fraser announced the bank would be divided into five main business lines, the latest change for the CEO since taking over in March 2021. Fraser said Friday that the changes should be completed by early 2024 and create financial benefits down the line.

“While expense is not the primary driver of the organizational changes, they will help us start bending the expense curve in the fourth quarter of next year,” Fraser said.

The new structure, announced Sept. 13, is expected to include job cuts. CFO Mark Mason declined to give guidance on head count during Friday’s call.

Citigroup’s net interest margin for the quarter was 2.49%, above the 2.41% expected, according to FactSet’s StreetAccount. Mason said that the company expects its 2023 full-year net interest income to come in slightly above previous guidance.

Another initiative under Fraser has been Citi selling off its retail banking business in some international markets. The latest move on that front came on Oct. 9, when the bank announced that it had struck a deal to sell its onshore consumer wealth portfolio in China. Fraser said Friday that the bank expects to close sale of Indonesia consumer business in the fourth quarter.