Citigroup profit rises 15% as credit card, trading revenue jump

Citigroup profit rises 15% as credit card, trading revenue jump

The Citigroup Inc logo is seen at the SIBOS banking and financial conference in Toronto
FILE PHOTO: The Citigroup Inc (Citi) logo is seen at the SIBOS banking and financial conference in Toronto, Ontario, Canada October 19, 2017. REUTERS/Chris Helgren

REUTERS: Citigroup Inc beat analysts' estimates for fourth-quarter profit on Tuesday (Jan 14), boosted by growth in its credit card business and a jump in trading revenue.

North American branded cards, which account for a majority of the bank's consumer banking revenue, clocked double-digit revenue growth for the second straight quarter, rising 10 per cent from a year earlier.

The third-largest US bank by assets has been leveraging its robust card business to help grow deposits by pitching checking and savings accounts to card holders.

Trading revenue rose nearly 31 per cent as markets steadied during the last three months of 2019, with the gains driven by a 49 per cent surge in fixed-income trading. Equities trading fell 23 per cent due to weak performance in derivatives.

Rival Wall Street bank JPMorgan Chase & Co also reported an increase in trading revenue on Monday.

The largest US bank by assets said revenue from bond trading surged 86 per cent from a year earlier, when financial markets were roiled by a selloff triggered by concerns over trade and global growth. Revenue from its equities business rose 15 per cent to US$1.5 billion.

Citi also reached a key profitability target. The bank hit a return on tangible common equity (ROTCE) of 12.1 per cent for 2019, above the goal of 12 per cent it promised investors for the year.

ROTCE is a widely watched measure of how well a bank uses shareholder money to generate profits.

The lender's shares rose 1.5 per cent in early trading.

Citi added loans and deposits in the most recent quarter. Total end-of-period loans grew 2 per cent, while deposits jumped 6 per cent, excluding foreign-exchange fluctuations. Credit costs jumped 15 per cent.

Total loans, excluding home lending, rose 3 per cent at JPMorgan.

Net interest income, or the difference between what a bank pays for deposits and earns from loans, was up 1 per cent at Citi, compared with declines at JPMorgan and Wells Fargo & Co.

The US Federal Reserve cut interest rates three times last year, crimping banks' lending margins and their ability to raise revenue.

Net income applicable to common shareholders rose to US$4.98 billion, or US$2.15 per share, in the three months ended Dec 31, from $4.31 billion, or US$1.64 per share, a year earlier.

Excluding the impact of a tax benefit, Citi earned US$1.90 per share.

Revenue, net of interest expense, rose about 7 per cent to US$18.38 billion.

Analysts had expected a profit of US$1.84 per share and revenue of US$17.86 billion, according to IBES data from Refinitiv

Source: Reuters