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Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, Citigroup witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.
Net income for the quarter was $3.54 billion, up 2% from the prior-year quarter.
Revenues & Expenses Increase
Revenues, net of interest expenses, moved up 9% year over year to $20.14 billion in the third quarter. The top line outpaced the Zacks Consensus Estimate of $19.36 billion.
In the Institutional Clients Group segment, the total revenues, net of interest expenses, were $10.64 billion in the reported quarter, up 12% year over year. Our estimate for the same was $10.56 billion.
The Personal Banking and Wealth Management segment’s revenues increased 10% year over year to $6.77 billion. Our estimate for the metric was $6.63 billion.
Legacy Franchises’ revenues of $2.21 billion moved down 13% year over year. Our estimate for the metric was $1.93 billion.
Corporate/Other’s revenues were $500 million, surging 67% from the prior-year quarter.
Citigroup’s operating expenses increased 6% year over year to $13.51 billion. Our estimate for the metric was $13.75 billion.
Balance Sheet Position Mixed
At the end of the third quarter, Citigroup’s deposits were down 4% from the prior quarter to $1.27 trillion. The company’s loans increased 1% to $666 billion.
Credit Quality Deteriorates
Total non-accrual loans increased 14% year over year to $3.3 billion. Allowance for credit losses on loans was $17.6 billion compared with $16.3 billion in the prior-year quarter.
Also, Citigroup’s costs of credit for the third quarter were $1.8 billion compared with the $1.4 billion recorded in the year-earlier quarter.
Capital Position Strong
At the end of the third quarter, Citigroup’s Common Equity Tier 1 capital ratio was 13.5%, up from 12.3% in third-quarter 2022. Also, the company’s supplementary leverage ratio in the reported quarter was 6%, rising year over year from 5.7%.
Capital Deployment Solid
In the reported quarter, Citigroup returned $1.5 billion to shareholders through common share dividends and share repurchases.
Our Viewpoint
More than a year after announcing plans to exit Banamex in Mexico, Citigroup decided to pursue an IPO of the business. The bank has been pursuing a carve-out of the ICG business since announcing its plan to exit the business through a sale or a public market alternative. The company expects the separation of the businesses to be completed in the third half of 2024 and the IPO to take place in 2025.
Citigroup’s third-quarter revenue growth was largely driven by strength in Services and Markets in Institutional Clients Group, and US Personal Banking in the Personal Banking and Wealth Management segment. However, the bank witnessed a revenue reduction from the closed exits and wind-downs in the Legacy Franchises segment.
Due to transformation expenses and business-led investments, expenses may flare up in the upcoming period, impeding bottom-line growth.
Webster Financial (WBS - Free Report) is scheduled to announce third-quarter 2023 numbers on Oct 19.
Over the past week, the Zacks Consensus Estimate for WBS’s quarterly earnings has moved marginally north to $1.50. It implies a 2.7% rise from the prior-year reported number.
Texas Capital Bancshares (TCBI - Free Report) is scheduled to announce third-quarter 2023 results on Oct 19.
Over the past seven days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved marginally downward to $1.02. It implies a 37.8% fall from the prior-year reported number.
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Citigroup (C) Q3 Earnings & Revenues Beat, Expenses Rise Y/Y
Citigroup Inc.’s (C - Free Report) third-quarter 2023 earnings per share (excluding divestiture-related impacts) of $1.52 outpaced the Zacks Consensus Estimate of $1.26.
In the third quarter, Citigroup witnessed a rise in revenues due to higher revenues in the Institutional Clients Group, as well as the Personal Banking and Wealth Management segments. The higher cost of credit was another spoilsport.
Net income for the quarter was $3.54 billion, up 2% from the prior-year quarter.
Revenues & Expenses Increase
Revenues, net of interest expenses, moved up 9% year over year to $20.14 billion in the third quarter. The top line outpaced the Zacks Consensus Estimate of $19.36 billion.
In the Institutional Clients Group segment, the total revenues, net of interest expenses, were $10.64 billion in the reported quarter, up 12% year over year. Our estimate for the same was $10.56 billion.
The Personal Banking and Wealth Management segment’s revenues increased 10% year over year to $6.77 billion. Our estimate for the metric was $6.63 billion.
Legacy Franchises’ revenues of $2.21 billion moved down 13% year over year. Our estimate for the metric was $1.93 billion.
Corporate/Other’s revenues were $500 million, surging 67% from the prior-year quarter.
Citigroup’s operating expenses increased 6% year over year to $13.51 billion. Our estimate for the metric was $13.75 billion.
Balance Sheet Position Mixed
At the end of the third quarter, Citigroup’s deposits were down 4% from the prior quarter to $1.27 trillion. The company’s loans increased 1% to $666 billion.
Credit Quality Deteriorates
Total non-accrual loans increased 14% year over year to $3.3 billion. Allowance for credit losses on loans was $17.6 billion compared with $16.3 billion in the prior-year quarter.
Also, Citigroup’s costs of credit for the third quarter were $1.8 billion compared with the $1.4 billion recorded in the year-earlier quarter.
Capital Position Strong
At the end of the third quarter, Citigroup’s Common Equity Tier 1 capital ratio was 13.5%, up from 12.3% in third-quarter 2022. Also, the company’s supplementary leverage ratio in the reported quarter was 6%, rising year over year from 5.7%.
Capital Deployment Solid
In the reported quarter, Citigroup returned $1.5 billion to shareholders through common share dividends and share repurchases.
Our Viewpoint
More than a year after announcing plans to exit Banamex in Mexico, Citigroup decided to pursue an IPO of the business. The bank has been pursuing a carve-out of the ICG business since announcing its plan to exit the business through a sale or a public market alternative. The company expects the separation of the businesses to be completed in the third half of 2024 and the IPO to take place in 2025.
Citigroup’s third-quarter revenue growth was largely driven by strength in Services and Markets in Institutional Clients Group, and US Personal Banking in the Personal Banking and Wealth Management segment. However, the bank witnessed a revenue reduction from the closed exits and wind-downs in the Legacy Franchises segment.
Due to transformation expenses and business-led investments, expenses may flare up in the upcoming period, impeding bottom-line growth.
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 Dates & Expectations of Other Banks
Webster Financial (WBS - Free Report) is scheduled to announce third-quarter 2023 numbers on Oct 19.
Over the past week, the Zacks Consensus Estimate for WBS’s quarterly earnings has moved marginally north to $1.50. It implies a 2.7% rise from the prior-year reported number.
Texas Capital Bancshares (TCBI - Free Report) is scheduled to announce third-quarter 2023 results on Oct 19.
Over the past seven days, the Zacks Consensus Estimate for TCBI’s quarterly earnings has moved marginally downward to $1.02. It implies a 37.8% fall from the prior-year reported number.