Citigroup (C) posted better-than-expected third quarter earnings Friday, but a big slump in investment banking revenues, as well as higher operating expenses, clouded an otherwise solid profit update.
Citigroup said earnings for the three months ending in September were pegged at $3.5 billion, or $1.63 per share, down 24.1% from the same period last year but well ahead of the Street consensus forecast of $1.42 per share. Group revenues, Citigroup said, rose 7.6% to $18.5 billion, coming in just ahead of analysts' estimates of an $18.26 billion tally.
Revenues in Treasury and trade solutions, its global business, rose 40% to $3.2 billion while overall group operating expenses were up 8% to $12.7 billion.
Investment banking revenues were down 64% from last year, the bank said, thanks in part to the broader slump in global dealmaking. Merger activity, in fact, is down around 55% from last year's levels, according to Refinitiv data, with just $692 billion in deals completed. That's the lowest total since the second quarter of 2020 and the biggest year-on-year decline since 2009.
"Banking was the business most adversely impacted by the macro environment with reduced deal flows and a lower appetite for M&A," said CEO Jane Fraser. "While the backdrop for wealth management was difficult, ou revenues were up outside of Asia. U.S. Personal Banking further solidified its growth trajectory with double digit revenue growth in both of our cards businesses."
"Given the strength of our balance sheet, capital levels and liquidity, we are well positioned to help our clients navigate very challenging markets and slower growth," she added.
Citigroup shares were marked 2.8% higher in early Friday trading following the earnings release to change hands at $44.14 each.
Earlier Friday, Citigroup's larger rival, JPMorgan (JPM), set aside more than $800 million to cover potentially bad loans in a weakening domestic economy but offset the slump in dealmaking activity with a 33% increase in net interest income.
JPMorgan said earnings for the three months ending in September were pegged at $3.32 per share, down 11.2% from he same period last year abut firmly ahead of the Street consensus forecast of $2.89 per share.
Managed revenues, JPMorgan said, rose 7.5% to $32.7 billion, just ahead of analysts' estimates of a $32.03 billion tally
