Citigroup’s stock surges after profit and revenue beats, on IC strength and stabilized credit costs

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Shares of Citigroup Inc. climbed 2.4% in premarket trading Tuesday, after the bank reported third-quarter profit and revenue that beat expectations, helped by strength in the institutional clients (IC) business and as credit costs have stabilized. Net income fell to $3.2 billion, or $1.40 a share, from $4.9 billion, or $2.07 a share, in the year-ago period, but that beat the FactSet EPS consensus of 91 cents. Total revenue fell 7% to $17.30 billion but topped the FactSet consensus of $17.21 billion. IC revenue rose 5% to $10.35 billion, above the FactSet consensus of $9.89 billion, as equity markets revenue grew 15% to $875 million and fixed income markets revenue increased 18% to $3.79 billion. Global consumer banking revenue fell 13% to $7.17 billion to fall shy of expectations of $7.23 billion. Credit costs were $2.26 billion, up 8% from a year ago but down 71% from the sequential second quarter, as reserve build was $314 million versus $5.60 billion the previous quarter. “The backbone of our global network, Treasury and Trade Solutions experienced strong client engagement in the face of low interest rates,” said Chief Executive Michael Corbat. “Although Global Consumer Banking revenues remained lower as a result of the pandemic, we did see higher activity in our mortgage and wealth management products.” Citigroup’s stock has tumbled 42.6% year to date through Monday, while the SPDR Financial Select Sector ETF has dropped 17.1% and the S&P 500 has gained 9.4%.
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