Citigroup beats 3rd-quarter profit estimates but stock falls after fixed-income trading revenue disappoints
- Citigroup reported third-quarter earnings on Friday that beat revenue and profit estimates.
- But revenue derived from the bank's fixed income and trading arm fell short, hurting the stock price.
- The bank also said it's in the process of winding down nearly all of its exposure to Russia.
Citigroup reported third-quarter earnings results that beat analyst estimates on Friday, but mixed trading results sent shares lower.
The company generated $3.06 billion in revenue from its fixed income sales and trading division, which fell short of analyst estimates for $3.17 billion in revenue. Meanwhile, Citi's equities sales and trading revenue of $1.01 billion slightly beat analyst estimates of $995.8 billion
Shares of Citigroup gave up early morning gains and fell about 0.5% following the results.
Here are other key numbers:
Revenue: $18.51 billion, versus the average analyst estimate of $18.25 billion
Adjusted earnings per share: $1.50, versus the average analyst estimate of $1.42
Deposits: $1.3 trillion, down 3% year-over-year
"Given the strength of our balance sheet, capital levels and liquidity, we are well positioned to help our clients navigate very challenging markets and slower growth," Citigroup CEO Jane Fraser said.
Investment banking revenue of $631 million fell well short of analyst estimates for $1.07 billion. The big miss comes as capital markets continue to deal with sour equity markets and poor investor sentiment, which has virtually closed the IPO market.
The company's total allowance for credit losses on loans was $16.3 billion in the quarter, with a reserve-to-funded loans ratio of 2.54%. That compares to last year's allowance for credit losses of $17.7 billion.
Citi also said it was winding down its operations and exposure to Russia, with plans to end nearly all of its institutional banking services in the country by the end of the first quarter of 2023. After that, the only exposure the bank will have to Russia will be those necessary to fulfill its remaining legal and regulatory obligations.
Also on Friday, JPMorgan beat its earnings estimates as the bank saw revenue derived from its fixed-income trading unit beat expectations. But Morgan Stanley missed forecasts as investment banking revenue tumbled.