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Citigroup (C) Q3 Earnings and Revenues Surpass Estimates
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Citigroup Inc.’s (C - Free Report) third-quarter 2022 earnings per share (excluding Asia consumer divestiture-related impacts) of $1.50 have handily outpaced the Zacks Consensus Estimate of $1.46.
After reporting better-than-expected earnings, shares of the company moved up marginally in the pre-market trading. The full-day trading session will display a clearer picture.
Management noted, “Given the strength of our balance sheet, capital levels and liquidity, we are well positioned to help our clients navigate very challenging markets and slower growth.”
Citigroup witnessed growth in net interest income. However, declines in investment banking revenues, loans and deposits were spoilsports.
Net income was $3.47 billion, decreasing 25% from the prior-year quarter.
Revenues Rise, Expenses Flare Up
Revenues, net of interest expenses, moved up 6% year over year to $18.5 billion in the third quarter. The top line outpaced the Zacks Consensus Estimate of $18.37 billion.
In the Institutional Clients Group segment, total revenues, net of interest expenses, were $9.46 billion in the third quarter, down 5% year over year.
The Personal Banking and Wealth Management segment’s revenues increased 6% year over year to $6.18 billion.
Legacy Franchises’ revenues of $2.55 billion moved up 66% year over year.
Corporate/Other’s revenues were $299 million, improving from the prior-year quarter’s $68 million.
Citigroup’s operating expenses rose 8% year over year to $12.74 billion.
Balance Sheet Position Deteriorates
At the end of the third quarter, Citigroup’s deposits were down 1% from the prior quarter to $1.30 trillion. The company’s loans declined 2% to $646 billion.
Credit Quality Improves
Total non-accrual loans declined 28% year over year to $2.9 billion. Also, Citigroup’s total allowance for credit losses on loans was $16.3 billion at the end of the reported quarter compared with $17.7 billion in the year-ago period.
However, Citigroup’s costs of credit for the September-end quarter were $1.4 billion against a negative $0.2 billion recorded in the year-earlier quarter.
Capital Position Decent
At the end of the third quarter, Citigroup’s Common Equity Tier 1 capital ratio was 12.2%, up from 11.7% in third-quarter 2021. However, the company’s supplementary leverage ratio in the reported quarter was at 5.7%, down from 5.8%.
Capital Deployment
In the reported quarter, Citigroup returned $1 billion to shareholders in the form of common share dividends.
Our Viewpoint
In August, the company announced the winding down of its Russia consumer and local commercial banking businesses. It will discontinue all the institutional banking services offered in the country by the end of first-quarter 2023.
Advancing its strategy to exit the consumer banking business in 14 international markets, Citigroup aims to simplify operations and expand institutional franchises in targeted regions. Net interest income is likely to be supported by the rising rates, going forward. However, elevated operating expenses remain major headwinds.
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Citigroup (C) Q3 Earnings and Revenues Surpass Estimates
Citigroup Inc.’s (C - Free Report) third-quarter 2022 earnings per share (excluding Asia consumer divestiture-related impacts) of $1.50 have handily outpaced the Zacks Consensus Estimate of $1.46.
After reporting better-than-expected earnings, shares of the company moved up marginally in the pre-market trading. The full-day trading session will display a clearer picture.
Management noted, “Given the strength of our balance sheet, capital levels and liquidity, we are well positioned to help our clients navigate very challenging markets and slower growth.”
Citigroup witnessed growth in net interest income. However, declines in investment banking revenues, loans and deposits were spoilsports.
Net income was $3.47 billion, decreasing 25% from the prior-year quarter.
Revenues Rise, Expenses Flare Up
Revenues, net of interest expenses, moved up 6% year over year to $18.5 billion in the third quarter. The top line outpaced the Zacks Consensus Estimate of $18.37 billion.
In the Institutional Clients Group segment, total revenues, net of interest expenses, were $9.46 billion in the third quarter, down 5% year over year.
The Personal Banking and Wealth Management segment’s revenues increased 6% year over year to $6.18 billion.
Legacy Franchises’ revenues of $2.55 billion moved up 66% year over year.
Corporate/Other’s revenues were $299 million, improving from the prior-year quarter’s $68 million.
Citigroup’s operating expenses rose 8% year over year to $12.74 billion.
Balance Sheet Position Deteriorates
At the end of the third quarter, Citigroup’s deposits were down 1% from the prior quarter to $1.30 trillion. The company’s loans declined 2% to $646 billion.
Credit Quality Improves
Total non-accrual loans declined 28% year over year to $2.9 billion. Also, Citigroup’s total allowance for credit losses on loans was $16.3 billion at the end of the reported quarter compared with $17.7 billion in the year-ago period.
However, Citigroup’s costs of credit for the September-end quarter were $1.4 billion against a negative $0.2 billion recorded in the year-earlier quarter.
Capital Position Decent
At the end of the third quarter, Citigroup’s Common Equity Tier 1 capital ratio was 12.2%, up from 11.7% in third-quarter 2021. However, the company’s supplementary leverage ratio in the reported quarter was at 5.7%, down from 5.8%.
Capital Deployment
In the reported quarter, Citigroup returned $1 billion to shareholders in the form of common share dividends.
Our Viewpoint
In August, the company announced the winding down of its Russia consumer and local commercial banking businesses. It will discontinue all the institutional banking services offered in the country by the end of first-quarter 2023.
Advancing its strategy to exit the consumer banking business in 14 international markets, Citigroup aims to simplify operations and expand institutional franchises in targeted regions. Net interest income is likely to be supported by the rising rates, going forward. However, elevated operating expenses remain major headwinds.
Citigroup Inc. Price, Consensus and EPS Surprise
Citigroup Inc. price-consensus-eps-surprise-chart | Citigroup Inc. Quote
At present, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Release Dates of Other Banks
Fifth Third Bancorp (FITB - Free Report) is slated to report third-quarter 2022 results on Oct 20.
The Zacks Consensus Estimate for Fifth Third’s third-quarter earnings of 98 cents indicates a 4.3% rise from the prior-year quarter’s reported figure.
Citizens Financial Group (CFG - Free Report) is slated to report third-quarter 2022 results on Oct 19.
The Zacks Consensus Estimate for Citizens Financial’s third-quarter earnings of $1.22 is flat with the prior-year quarter’s reported number.