Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Citigroup profits fell far less than expected to $3.2bn in the third quarter, as a revival in investment banking helped offset rising loan losses.
Profits dropped 9 per cent from the same period a year earlier — or 4 per cent excluding a $200mn one-off gain a year ago from Citi’s sale of its Taiwan consumer business. Analysts had expected the bank to report earnings of $2.6bn.
Citi is the latest big US bank to report better than anticipated results, raising hopes among investors that the US economy is heading for a “soft landing” where it avoids a recession as the Federal Reserve starts to reverse its earlier interest rate rises.
Last week, rivals JPMorgan Chase and Wells Fargo both reported higher than expected profits, buoyed by continued consumer spending and an uptick in corporate dealmaking.
US bank stocks on Friday hit their highest level since before the collapse of Silicon Valley Bank following the results.
Citi set aside 45 per cent more in the quarter for loan and credit losses than it did a year ago, at $2.7bn.
But turnarounds in its investment banking and wealth management divisions in part offset an industry-wide drop in lending profits compressed by the recent drop in interest rates.
Investment banking fees rose 44 per cent from a year ago to $999mn, while revenues in Citi’s wealth division rose 9 per cent to $2bn, its best quarter since the bank began breaking out results for the unit five years ago.
Citi has brought in high-profile executives to run the businesses in the past year, recruiting Vis Raghavan from JPMorgan to head corporate banking and former Bank of America executive Andy Sieg to lead the wealth unit.
Citi’s investment bankers have secured roles on a number of recent big deals, including the buyout of French pharmaceutical group Sanofi’s $16bn consumer business and consumer group Mars’s $36bn acquisition of the maker of Pringles and Pop Tarts, Kellanova.
Sales and trading revenue increased 1 per cent, driven by a 32 per cent increase in commissions and gains from the bank’s stock traders. Revenues in Citi’s much larger fixed income trading division declined 6 per cent.
Overall, Citi’s revenues rose 1 per cent to $20.3bn. Analysts had been expecting Citi’s sales to fall slightly.
