Citigroup profit beats on investment banking boost
Net income rose after effective tax rate dipped
Citi chief executive Mike Corbat says the company’s efforts are showing positive early result. Photograph: Andrew Harrer/Bloomberg
Citigroup reported higher-than-expected earnings on Monday despite declining revenue as the New York-based lender cut costs, grew investment-banking revenues and expanded net-interest margins.
Still, Citi improved its results in ways, including the expense cutting, that may be tough to replicate in future quarters. A lower tax rate also played a big role in Citi’s improvement from a year ago.
The bank’s income from continuing operations actually declined slightly. But net income rose because its effective tax rate declined to 21 per cent from 24 per cent a year earlier.
Citi has been investing in digital capability to try to win deposits domestically despite its light US branch network. Chief executive Mike Corbat said in a statement its efforts are showing positive early results.
However, the bank is still growing deposits faster abroad than in the US: international consumer deposits rose 3 per cent during the quarter, while retail North American deposits edged up 1 per cent.
US consumer deposits
JPMorgan Chase on Friday reported that its US consumer deposits were up 3 per cent from a year earlier.
Investment banking revenue rose 20 per cent to $1.4 billion, as strong growth in advisory and investment-grade debt underwriting more than offset a drop in equity underwriting.
Bond trading rose 1 per cent in sharp contrast to Goldman Sachs and JPMorgan, both of which reported declines.
But a 24 per cent drop in equities trading pressured Citi’s overall revenue, which fell 2 per cent to $18.58 billion, slightly below analysts’ estimates.
Revenue from consumer banking, the bank’s largest business, was flat at $8.5 billion, due to weakness in Asia. – Reuters