Citigroup Q3 Profit Up 8%, Results Beat View

JPMorgan and Citigroup, which had already talked down third-quarter expectations, reported earnings that were better than Wall Street estimates even as trading revenues fell.

"After a long stretch of consecutive highs in the market, with earnings, even if they are slightly disappointing, or an even an aspect of earnings like bond trading at JPM, is more an excuse to selloff", said Scott Clemons, chief investment strategist for Brown Brothers Harriman in NY. Analysts expected revenue of $17.9 billion for the quarter.

Citigroup's investment bank was the driver of the bank's profit growth in the quarter, despite a notable drop in bond trading revenue. Earnings per share rose about 15 percent to $1.42, bolstered by the bank's move to reduce its shares outstanding by 7 percent.

AT&T tumbled more than 4 percent after the No. 2 USA wireless carrier said it lost 90,000 US video subscribers in the third quarter due to intense competition and the impact of recent hurricanes.

Citigroup has been the best-performing stock among the biggest US banks so far in 2017, thanks in large part to its commitment earlier this year to a plan to return some $60 billion to shareholders by 2020.

In July, Citigroup held its first investor day in nine years.

Performance for Citigroup was particularly strong in equities, where revenue increased 16% from a year ago.

The bank added $500m to reserves in the cards business, based on its expectations for soured loans and the impact of recent hurricanes.

Offsetting the trading performance was another sharp rise in investment banking at Citigroup.

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Chief Executive Michael Corbat has pledged to grow profits from consumer lending to stock trading, and return tens of billions of dollars to shareholders after finally putting the United States' fourth-largest bank on a stable path following the 2007-09 financial crisis.

Last month, Gersprach warned that overall trading revenue would fall by 15 percent, worse than the 11 percent drop that materialized.

Bank of America and Wells Fargo, scheduled to report on Friday, were also lower, dragging the financials index down 0.39 percent.

Global consumer banking net income fell 6% year-over-year to $1.17 billion as credit costs rose. Citi's institutional client group, which contains its trading desks and investment bank, had net income of $3.04 billion compared with $2.64 billion in the same period a year earlier.

However, the bank's consumer-banking profit fell 6% from a year ago.

Like its Wall Street rival JP Morgan Chase & Co (NYSE:JPM) - which reported its results earlier today - Citi recorded a 16% year-on-year decline in fixed income trading revenue which totalled US$2.88bn.

Citi-branded cards in the USA 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.

Citigroup made progress on promises of greater cost control. That helped the bank achieve a 56 per cent efficiency ratio, beating its own forecast.

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