Citigroup earnings edge lower
NEW YORK — Citigroup said its earnings fell slightly in the third quarter after a US$1 billion drop in revenue from its bond trading business and a slump in mortgage refinancing.
Net income for the July-to-August period fell to US$3.26 billion from US$3.27 billion in the same period a year ago after excluding an accounting gain and other one-time items. The earnings amount to US$1.02 per share compared with US$1.06 per share last year.
Revenue fell to US$18.2 billion compared with US$19.2 billion a year ago.
The bank said that “significantly lower” mortgage refinancing business in the US contributed to a seven per cent decline in Citi’s consumer banking revenue. Rising interest rates in the second quarter made it less attractive for consumers to refinance their mortgages.
The rising rates also hurt Citi’s securities and banking unit. Revenues at Citi’s bond trading unit slumped 26 per cent in the third quarter, to US$2.8 billion from US$3.7 billion as bond yields climbed. Rates rose in anticipation that the Federal Reserve would start reducing the bond purchases that has been making to stimulate the economy.
Debt underwriting and advisory revenue also slumped.
Citigroup’s stock edged up eight cents to US$49.68 in midday trading, erasing an early loss. Wall Street analysts who follow the stock had predicted earnings of US$1.05 for the quarter, according to data provider FactSet.
Citigroup remains “hopeful” that lawmakers in Washington will be able to avert a potential US default, said John Gerspach, Citi’s Chief Financial Officer, on a call with reporters. The bank has been preparing for different contingencies over recent weeks and no longer holds any US Treasury securities that mature on the October 31, or earlier, the executive said.