Citigroup, the third-biggest U.S. bank, said profit rose 6.6% as bond-trading revenue climbed and lending improved.
Third-quarter net income rose to $3.44 billion, or $1.07 a share, from $3.23 billion, or $1, a year earlier, the New York- based company said Tuesday in a news release. Excluding special items, profit was $1.15 a share, beating the $1.12 average estimate of 23 analysts surveyed by Bloomberg. The firm also announced plans to exit consumer banking in 11 markets.
Chief Executive Officer Michael Corbat is seeking to refocus Citigroup on the business of banking and narrow its scope as new regulations encourage simpler business models. Commercial loans rose 2.8% in the third quarter for the largest U.S. banks, while revolving debt like credit cards advanced 1.1%, according to Federal Reserve data.
"You are seeing growth in some of their core businesses, like consumer lending as well as the corporate lending," Marty Mosby, an analyst with Vining Sparks in Memphis, Tenn., said in a telephone interview before the results were announced.
The U.S. economy has returned as an engine of global growth, surging at a 4.6% annual rate from April through June, after contracting 2.1% in the first quarter. The jobless rate declined to 6.1% in August, the lowest since 2008.
Revenue from fixed-income markets rose 5% from a year earlier to $2.98 billion, according to the release. Trading and market volatility picked up in the final weeks of the quarter, sparked by a stronger U.S. dollar, concern that Scotland would secede from the U.K. and Bill Gross's departure from Pacific Investment Management Co. Volatility leads to increased trading as clients buy hedges or make bets against further moves.
Though "volumes and volatility remain depressed from a historical perspective," the stabilization of trading revenue "is a refreshing change" from prior quarters, analysts for Stifel Financial Corp.'s KBW unit wrote in an Oct. 9 report.
OneMain Financial Holdings Inc., the bank's consumer- lending arm, filed for an initial public offering earlier this month as Citigroup looks to pare unwanted assets. OneMain has a value of at least $4 billion, people with knowledge of the matter have said, and Citigroup is also considering an outright sale of the business.
JPMorgan Chase & Co., the largest U.S. bank, reported earlier Tuesday that third-quarter profit swung to a profit of $5.6 billion as revenue rose 5.4 percent to $25.2 billion. Wells Fargo & Co., the biggest U.S. mortgage lender, is also scheduled to report earnings Tuesday.
