Citigroup earns $5.2 billion in the third quarter on higher revenue

What happened

Citigroup has now reported its third quarter too, filing net income of $5.2 billion on revenue of $23.8 billion on Tuesday 13 October, the day JPMorgan Chase and Wells Fargo reported. ^{[1, 2, 3]}

A year earlier, Citi's net income was $3.8 billion on revenue of $22.1 billion. That year-ago quarter carried a $726 million goodwill charge tied to the sale of a stake in Banamex, its Mexican bank; without it, net income was $4.5 billion. Chief executive Jane Fraser said the quarter 'included the best third-quarter revenue in a decade.' ^{[1, 3, 4]}

Why it matters

Revenue was 8 percent higher than a year earlier, and the release credits Services, Wealth, Markets and Banking for the growth. Services, which moves cash and holds securities for companies and institutions, had revenue of $6.6 billion, up 15 percent; Wealth had $3.3 billion, also up 15 percent. ^[1]

Where it was weaker

The provision for credit losses, money set aside for loans that may not be repaid, was $2.6 billion, against $2.5 billion a year earlier. The bank tied the larger reserve to changes in the economic outlook and to loan growth. ^[1]

Revenue from U.S. consumer cards was unchanged at $4.7 billion, the release says, as higher payments to partners and higher rewards costs offset interest income. Reuters reported that profit from cards was 8 percent lower than a year earlier. ^{[1, 3]}

Reuters also reported that trading revenue was 13 percent lower than in the second quarter. Chief financial officer Gonzalo Luchetti said of the reserve increases: 'We think it reflects prudence and helps us solve for a range of potential macro outcomes in a dynamic environment.' ^[3]

What the chief said

Citi returned $4.1 billion to shareholders in the quarter through buybacks and dividends, according to the release. Fraser said the bank expects to exceed this year's target for returns, a measure of profit against shareholders' capital. Reuters reported a year-to-date return of 12.6 percent against an 11 percent target. ^{[1, 3]}

Bank of America reported next

Bank of America reported net income of $6.9 billion on Wednesday 14 October, against $8.3 billion a year earlier, on revenue of $30.0 billion, 3 percent higher than $29.0 billion. The quarter carried a regulatory settlement charge of $1.2 billion; without it, net income was $8.1 billion, the bank said. ^{[7, 8]}

What settles it next

Morgan Stanley scheduled its results for about 7:30 a.m. New York time on Wednesday 14 October, with a call at 9:30 a.m. Bank of America's call was set for 8:30 a.m. the same day. Citi's capital ratios are preliminary until its quarterly report. ^{[6, 5, 1]}

Who it reaches

Citigroup (C) and Bank of America (BAC) are direct: the figures are from each bank's own release, filed with the SEC. Morgan Stanley (MS) is adjacent as the next large bank to report, on Wednesday 14 October. ^{[1, 2, 7, 8, 6]}