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Citigroup posts $3.2-billion profit amid slump in mortgages, trading

October 15, 2013|By Andrew Tangel
  • The Citibank building in New York.
The Citibank building in New York. (Mark Lennihan / Associated…)

NEW YORK -- Citigroup Inc.'s third-quarter earnings disappointed Wall Street analysts as the bank reported a sharp slowdown in mortgage and bond-trading revenue.

Citi said it earned $3.2 billion, or $1 a share, in net income in the quarter, up from $468 million, or 15 cents a share, during the same period a year ago.

But last year's third-quarter results included a $4.7-billion pre-tax loss related to Citi's stake in the Morgan Stanley Smith Barney joint venture.

Excluding that item as well as debt-related accounting adjustments and tax benefits in both quarters, the bank made $1.02 per share -- a decline of 4% and below the $1.04 expected by analysts surveyed by Thomson Reuters.

Citi's stock slumped more 1.2% in early trading, as shares fell 61 cents to $48.99.

Michael Corbat, Citi's chief executive, said the bank continued to make progress in its turnaround. He said the bank had further unwound its Citi Holdings segment, a repository of troubled mortgage investments stemming from the financial crisis.

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"We performed relatively well in this challenging, uneven macro environment," Corbat said in a statement. "While many of the factors which influence our revenues are not within our full control, we certainly can control our costs, and I am pleased with our expense discipline and improved efficiency year-to-date."

Excluding one-time charges, Citi's third-quarter revenue of $18.2 billion was off 5% year over year.

The bank cited "significantly lower U.S. mortgage refinancing activity" for a sharp decline in consumer banking revenue. Rivals Wells Fargo & Co. and JPMorgan Chase & Co. have also reported drops in their mortgage businesses.

Bond-trading revenue fell sharply in the third quarter -- by 26% to $2.8 billion -- amid "lower volumes and a more uncertain macro environment," the bank said. Investment banking revenue also slid, but the bank saw an increase in equity markets revenue.

It was a year ago this week that Corbat took over as Citi's CEO following the ouster of Vikram Pandit.

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