Citigroup Q3 Earnings Beat Estimates, IB Revenues Increase 31% Y/Y

Citigroup Inc.’s C third-quarter 2024 adjusted net income per share of $1.51 surpassed the Zacks Consensus Estimate of $1.34. The metric decreased 0.7% from the year-ago quarter.

Find the latest earnings estimates and surprises on the Zacks Earnings Calendar.

As expected, Citigroup posted a year-over-year increase of 31% in Investment Banking (IB) revenues, driven by strength in Debt Capital Markets. The company also witnessed a rise in total loans and deposits balance in the quarter. However, provisions for credit losses increased.

Net income (GAAP basis) in the quarter was $3.2 billion, which decreased 8.6% from the prior-year quarter.

Citigroup’s Revenues Increase, Expenses Decrease

Revenues, net of interest expenses, moved up 1% year over year to $20.32 billion in the third quarter. The top line surpassed the Zacks Consensus Estimate of $19.90 billion. 

Excluding divestiture-related impacts, primarily consisting of the nearly $400 million gain from the sale of the Taiwan consumer banking business in the prior-year period, revenues rose 3% year over year.

Net Interest Income (NII) fell 3% year over year to $13.36 billion, while non-interest revenues (NIR) increased 10% to $6.9 billion.

Citigroup’s operating expenses declined 2% year over year to $13.25 billion, both on a reported basis and excluding divestiture-related impacts. This decrease in expenses was primarily due to savings associated with the company’s organizational simplification and stranded cost reductions, partially offset by volume-related expenses, continued investments in transformation and other risks, and control initiatives.

Citigroup’s Segmental Performance

In the Services segment, total revenues, net of interest expenses, were $5.02 billion in the reported quarter, up 8% year over year. The increase primarily reflects continued momentum across Securities Services and Treasury, and Trade Solutions.

The Markets segment’s revenues increased 1% year over year to $4.82 billion, driven by growth in Equity markets’ revenues, partially offset by lower Fixed Income markets’ revenues.

Banking revenues of $1.59 billion moved up 16% year over year, primarily driven by growth in IB.

U.S. Personal Banking’s revenues were $5.05 billion, up 3% from the prior-year quarter, driven by higher net interest income due to loan growth in cards and higher non-interest revenues due to lower partner payments.

In the Wealth segment, revenues were $2 billion in the reported quarter, rising 9% year over year. The increase was driven by a 15% rise in non-interest revenues, reflecting higher investment fee revenues on momentum in client investment assets, as well as a 6% increase in net interest income due to higher deposit volumes and spreads.

Revenues in the All Other segment declined 18% year over year to $1.83 billion.

Citigroup’s Balance Sheet Position Strong

At the end of the third quarter, Citigroup’s deposits were up 2% from the prior quarter’s levels to $1.31 trillion. Also, its loans increased marginally on a sequential basis to $689 billion.

Citigroup' Credit Quality: Mixed Bag

Total non-accrual loans fell 34% year over year to $2.20 billion.  However, C’s provisions for credit losses and benefits and claims for the third quarter were $2.67 billion, up 45% from the year-earlier quarter.

Nonetheless, the allowance for credit losses on loans was $22.1 billion, up 9.4% from the prior-year quarter’s levels.

Citigroup's Capital Position Strong

At the end of the third quarter, the bank’s Common Equity Tier 1 capital ratio was 13.7%, up from 13.6% in the third quarter of 2023. However, the company’s supplementary leverage ratio in the reported quarter was 5.8% compared with 6% in the prior year.

Citigroup's Capital Deployment Solid

In the reported quarter, Citigroup returned $2.1 billion to shareholders through common share dividends and share repurchases.

Citigroup's 2024 Outlook

Management expects revenues of $80-$81 billion, driven by fee growth in the Services segment and a strong IB business.

NII (excluding Markets) is projected to be slightly down on a year-over-year basis.

Management anticipates expenses of $53.5-$53.8 billion (excluding FDIC special assessment and Civil Money Penalties).

Our Viewpoint on Citigroup

The company’s third-quarter 2024 results have reflected strength, driven by higher loans and deposit balances and lower expenses. The company’s revenue growth was largely driven by strength across businesses, particularly in Services, Banking, U.S. Personal Banking and Markets, offset by a decline in All Other segment revenues.

The business transformation initiatives, including its consumer business exits and organizational simplification efforts, will help it in the long run. Focus on growth in the profitable business while eliminating non-viable segments will likely aid results in the long run.

Citigroup Inc. Price, Consensus and EPS Surprise

Currently, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Dates & Expectations of Banks

M&T Bank Corporation MTB is slated to report third-quarter 2024 results on Oct. 17. It carries a Zacks Rank #3 at present.

Over the past month, the Zacks Consensus Estimate for MTB’s quarterly earnings per share has moved marginally downward to $3.60.

Fifth Third Bancorp FITB is scheduled to release third-quarter 2024 earnings on Oct. 18. The company carries a Zacks Rank #3 at present.

The consensus estimate for FITB’s quarterly earnings has remained unchanged at 82 cents per share over the past month.

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Citigroup Inc. (C): Free Stock Analysis Report
 
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M&T Bank Corporation (MTB): Free Stock Analysis Report

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