U.S. bank major Citigroup Inc. (C, Financial), along with Wells Fargo & Co. (WFC, Financial) and JPMorgan Chase & Co. (JPM, Financial), kicked off third-quarter earnings season before the opening bell on Friday.
The New York-based bank posted earnings of $1.73 per share, topping Refinitiv’s estimates of $1.69. Revenue was relatively unchanged from the year-ago quarter at $18.4 billion, just shy of the $18.5 billion analysts were expecting.
The bank’s net interest margin, which is a measure of profitability, was also in line with expectations at 2.7%.
Following the announcement, shares rose 2.4% in premarket trading.
Citigroup attributed its strong performance, in part, to lower corporate tax rates, which fell to 24% from 31% last year.
In a statement, CEO Michael Corbat said the bank also benefited from a 3% growth in loans to $675 billion and a 4% increase in deposits to $1.005 trillion.
While the loans and deposits growth, along with company-wide cost cuts, helped boost revenues, they only slightly offset the 2% sales decline in Citigroup’s Institutional Clients Group business, which was driven by a decrease in markets and securities revenue. The bank also saw investment banking revenue fall more than 16% to $1.18 billion, offsetting 9% growth in fixed income trading. Corporate revenue also decreased 5% as the bank wound down legacy assets.
Despite the weak overall revenue, Corbat said Citigroup is “firmly on track” to deliver its full-year financial targets.
“At the same time, we continue to make targeted investments which will fund future growth and enhance our ability to serve clients,” he added.
With a market cap of $179.61 billion, shares of Citigroup were trading around $69.26 on Friday morning. GuruFocus estimates the stock has tumbled 6% year to date.
The two remaining big five banks, Bank of America Corp. (BAC, Financial) and Goldman Sachs Group Inc. (GS, Financial), are scheduled to report earnings next week.
Disclosure: No positions.
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