Results beat expectations as the global bank showed income and revenues stabilizing after the nadir of mid-year results for many lenders.

Citigroup yesterday reported net income of $3.2 billion for the third quarter, down by 34 per cent year-on-year. Nevertheless, the numbers were viewed as a stabilizing trend after it had to set aside money to cover bad loans and suffered a sharp fall in profit in the middle of the year.

A $400 million civil penalty, which the bank is settling with regulators for failing to address “several longstanding deficiencies” in risk management, was also factored into third-quarter results. Revenues of $17.3 billion fell by 7 per cent for the quarter on continuing higher expenses and higher credit costs. It reported that net credit losses had dropped to $1.9 billion in Q3 from $2.2 billion registered in Q2 as a stablizing factor.

Earnings per share fell by a third to $1.40, but beat the 93 cents forecast by some analysts. Operating costs stood at $11 billion for the quarter, rising by 5 per cent based on putting in greater risk management controls and the ongoing COVID-19 related expenses.

Its tangible book value per share was up by 4 per cent on the same period last year rising to $71.95. Capitalization also improved for the quarter, with a CET1 capital ratio of 11.8 per cent for Q3, when the bank also returned $1.1 billion in dividends.

CEO Michael Corbat said the bank continues to navigate the pandemic “extremely well”. Its "credit costs have stabilized; deposits continued to increase; and revenues are up 3 per cent year-to-date,” he said.

Last month the firm announced that Corbat would be stepping down in February, to be replaced by his deputy Jane Fraser, paving the way for the first female CEO in charge of a Wall Street bank.

Citi's Institutional Clients Group (ICG) was the standout performer in Q3 in markets, investment banking and the private bank, where revenues were up by 5 per cent to $10.4 billion. Within the group, private bank revenues rose by 8 per cent to $938 million, driven by increased capital markets activity, improved managed investments revenues as well as higher lending and deposit volumes, the bank said. Treasury and trading businesses were other strong performers helping to offset falling revenues on the consumer side.