Citigroup reports a decline in net profit but tops expectations on revenue
Citigroup Inc. reported net income for the third quarter 2022 of $3.5 billion, or $1.63 per diluted share, on revenues of $18.5 billion, compared to net income of $4.6 billion, or $2.15 per diluted share, on revenues of $17.4 billion for the third quarter 2021.
Third quarter results included Asia Consumer divestiture-related impacts of approximately $520 million in earnings before taxes (approximately $256 million after-tax), primarily driven by a gain on the sale of the Philippines consumer business.
Revenues increased 6% from the prior-year period, primarily due to the gain on sale of the Philippines consumer business versus a loss on sale of the Australia consumer business in the prior-year period.
Excluding these divestiture-related impacts, revenues were down 1%5, as growth in net interest income was more than offset by lower non-interest revenues.
On this basis, higher net interest income was driven by the impact of higher interest rates across businesses and strong loan growth in Personal Banking and Wealth Management (PBWM).
This was more than offset by lower non-interest revenues reflecting declines in Investment Banking and Markets in Institutional Clients Group (ICG) and investment product revenues in Global Wealth Management in PBWM.
Net income of $3.5 billion decreased 25% from the prior-year period, primarily driven by higher cost of credit resulting from the loan growth in PBWM and higher operating expenses.
Earnings per share of $1.63 decreased 24% from the prior-year period, reflecting the lower net income, partially offset by an approximate 4% decline in average diluted shares outstanding.
Citi CEO Jane Fraser said, “We are intensely focused on supporting our clients and executing our strategy. We have made good progress on many of the core business drivers we laid out at Investor Day, despite the complex macro environment.
Treasury and Trade Solutions saw revenues up 40% year-over-year, with growth across all segments, and Securities Services was up 15%. In Fixed Income, we matched last year’s showing through our strength in FX, while Equities came in lower than last year.
Banking was the business most adversely impacted by the macro environment with reduced deal flows and a lower appetite for M&A. While the backdrop for wealth management was difficult, our revenues were up outside of Asia. U.S. Personal Banking further solidified its growth trajectory with double digit revenue growth in both of our cards businesses.
“We continue to shrink our operations in and exposure to Russia and we will be ending nearly all of the institutional banking services we offer next quarter. To be clear, our intention is to wind down our presence in this country.
“We returned $1 billion in capital to our shareholders and ended the quarter with a CET1 ratio of 12.2%, as we actively managed our RWA to improve the returns we generate for our shareholders. 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,” Ms. Fraser concluded.