Citigroup Inc, the fourth-biggest US bank by assets, beat expectations for third-quarter net profit on Friday after trading revenue surged 35 percent. The resurgence, which was echoed at rival J.P. Morgan, is a boost for Chief Executive Michael Corbat, who has stuck with the bank's trading business while shrinking large parts of its consumer banking business in overseas markets.
While net income fell 11 percent to $3.84 billion, or $1.24 per share, it exceeded the average estimate of $1.16 per share, according to Thomson Reuters I/B/E/S. Total adjusted revenue fell 4 percent to $17.76 billion, again beating the average estimate of $17.36 billion. Revenue at Citi's institutional clients group, which includes trading and investment banking, rose 13 percent, boosted by volatility in fixed income markets. That volatility and greater activity were spurred by Britain's June vote to leave the European Union, changing expectations for monetary policy in the United States, Europe and Japan, and money market reforms.
However, equity market revenue fell about 34 percent as political uncertainty discouraged companies from initial public offerings and share offers. J.P. Morgan reported a 1 percent increase. Citi's global consumer banking division had a less stellar performance. Net income fell by nearly a quarter due to a higher cost of credit and higher operating expenses. Part of those expenses were due to the cost of becoming the lender behind retailer Costco Wholesale Corp's co-branded credit cards this year from American Express Co.
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