Citigroup Beats Earnings Estimates For Third Straight Quarter

Citigroup Inc. (C - Analyst Report) ) reported third quarter earnings today and the numbers came in better than expected.  The bank reported a net income of $3.44 billion, up about 6.5% from last year same period.

After three consecutive days of losses, the market reacted positively and Citigroup is currently up 2.35% for the day trading at $51.08 per share.  

The bank reported earnings of $1.07 per share, beating the consensus estimate of $1.12 per share. The U.S. bank also posted revenue of $19.60 billion in the period beating an expected $19.02 billion.

Michael Corbat, Chief Executive Officer of Citi, said, “Our consumer bank and institutional business each had solid performance during the quarter and generated stronger revenues both sequentially and year-on-year.  The revenue improvement was evident across regions and products.  With Citi Holdings again turning a profit and the utilization of additional deferred tax assets, we again demonstrated progress against two execution priorities and increased our capital base.  We also continued our work to strengthen our capital planning process to meet the critical goal of returning capital to our shareholders.”

Strategic Action

The bank will be exiting 11 markets of its consumer businesses and concentrate on the markets that have the greatest opportunity for the greatest scale and growth potential.   This is an effort to transform their Global Consumer Banking (GCB) business and take full advantage of markets that are better positioned in this environment.   This will hopefully create a more transparent process when attempting to gauge the success of ongoing operations of Citi’s GCB.

The strategic actions are expected to be completed by the end of 2015. The affected businesses include the consumer franchises in Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea.

“I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders.  While we have made progress optimizing these 11 consumer markets, we believe our Global Consumer Bank will achieve stronger performance by focusing on the countries where our scale and network provide a competitive advantage,” Mr. Corbat concluded.

GCB reported revenues of $9.6 billion, up 4% from the prior year period, driven by growth in North America, Latin America and Asia.GCB net income rose 26% versus the prior year period to $1.9 billion, reflecting the increase in revenues and a lower cost of credit, partially offset by higher operating expenses.