Citigroup profit beats as credit card, trading revenue jump
Citi has been leveraging its robust card business to help grow deposits by pitching checking and savings accounts to card holders
Citigroup Inc (C.N) beat analysts' estimates for fourth-quarter profit on Tuesday, boosted by growth in its credit card business and a jump in trading revenue.
North American branded cards, which account for a majority of consumer banking revenue, continued to be a bright spot for the bank, clocking double-digit revenue growth for the second straight quarter. Revenue grew 10 percent from a year earlier.
Citi has been leveraging its robust card business to help grow deposits by pitching checking and savings accounts to card holders.
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Trading revenue rose nearly 31 percent as markets steadied during the last three months of 2019. The gains were driven by a 49 percent surge in fixed-income trading that offset a 23 percent decline in equities trading, where weak performance in derivatives weighed on results.
In the year-earlier quarter, the bank's equities trading business came under pressure from a spike in volatility, while a widening of the yield spreads weighed on the fixed-income business.
Citi also reached a key profitability target. The third-largest U.S. bank by assets hit a return on tangible common equity (ROTCE) of 12.1 percent for 2019, above the goal of 12percent 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 were up about 1 percent in premarket trade.
Citi continued to add loans and deposits in the most recent quarter, reflecting continued growth in the economy.
Total end-of-period loans grew 2 percent and deposits jumped 6 percent, excluding foreign-exchange fluctuations. Credit costs jumped 15 percent. Net income applicable to common shareholders rose to $4.98 billion, or $2.15 per share, in the three months ended Dec. 31, from $4.31 billion, or $1.64 per share, a year earlier. Excluding the impact of a tax benefit, the bank earned $1.90 per share. (citi.us/2tZ7XOu)
Revenue, net of interest expense, rose about 7 percent to $18.38 billion.
Analysts had expected a profit of $1.84 per share and revenue of $17.86 billion, according to IBES data from Refinitiv.
