Citigroup Profit Exceeds Expectations for Third Quarter

Citigroup Inc. posted a quarterly profit that was better than had been expected, helped by less expenses, higher revenue from bond trading and strength in its Mexico consumer banking business.

The company’s expenses fell 1% surprising Wall Street and showing the company was on track to meeting its financial targets for 2018.

The company showed improvement in its yield from its card business in North America that is Citi-branded, which analysts had been following closely, and has added one more argument for the bank’s profit outlook.

Shares of Citigroup were 1.6% on the news and closed Friday up 2.14% to $69.84.

Investors have waited to see how the big five Wall Street banks fare in trading revenue, due to the escalating trade war between Washington and Beijing and executives sounding warnings that the growth in the business would end up muted.

Citigroup posted a jump of 9% in its revenue from bond trading, outperforming large rival JPMorgan Chase, which posted a drop of 10% in revenue from fixed-income trading.

CFO John Gerspach said previously that Citigroup was expecting equity trading and total fixed income to be flat to slightly higher during the third quarter.

Citigroup is going through a push to save costs of $2.8 billion before 2020 as it spends over $1.5 billion on new technology and other improvements in productivity.

Citigroup posted a 2% increase in revenue from global consumer banking. It recently restructured the consumer business in the U.S. to operate more like ones in Mexico and Asia, where it has seen better results.

Latin America revenue in consumer banking rose by 8%, excluding a gain of one-off and using a basis of constant currency.

The branded card yields in North America turned upward as more promotional loans for credit cards that charge no interest for up to 21 months, converted to earning interest.

Gerspach told analysts that the promotional strategy is paying off as balances for interest-earning grew 7% and that net interest revenue as a percentage of loans rose from 8.28% to 8.51%.

Net income for the nation’s third largest bank by assets increased to $4.62 billion for the third quarter that ended September 30, compared to last year during the same period of $4.13 billion.

Per share earnings increased from last year’s $1.42 to $1.73, aided by buybacks that lowered the outstanding shares by 8% compared to one year earlier.

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