The Zhitong Finance App learned that due to increased investment banking revenue, increased trading activity with multinational companies, and increased profits in the wealth management business, Citibank (C.US)'s third quarter results were better than market expectations. According to financial reports, Citi's Q3 revenue increased 7.7% year over year to US$23.845 billion, which was 80 million US dollars higher than market consensus expectations; net profit was US$5.245 billion, up 40% year on year; GAAP earnings per share were 2.85 US dollars, which was 0.20 US dollars higher than market consensus expectations.
The initial Tier 1 capital adequacy ratio (CET1) for common shares at the end of the quarter was 12.8%, which was the same as at the end of the previous quarter. It was mainly driven by net income and reduced deductions for deferred income tax assets and other items, but was offset by common share repurchases, common stock and preferred stock dividend payments, and unrealized losses on marketable securities. The return on tangible common shareholders' equity (ROTCE) is 11.5%, 12.6% from the beginning of the year, all higher than the bank's annual target of 11%, and is well positioned among large banks.
The business structure showed clear “non-transaction-driven” characteristics. Net revenue from the service business (cash management, trade and securities services for institutional customers) increased 15% year over year to US$6.614 billion, and profit increased 27% year over year, making it the strongest profit growth engine this quarter. Net revenue from the wealth management business increased 15% year over year to US$3.269 billion, and customer assets increased 15% at the same time.
Net revenue from market operations was US$6.113 billion, up 6% year over year. Among them, stock trading revenue increased 14% year over year, and fixed income transaction revenue increased 4% year over year, but declined from the second quarter, reflecting a cooling of capital market activity in the third quarter. Net banking revenue was US$1,741 million, up 6% year on year; investment banking expenses were US$1.35 billion, up 9% year on year but fell 13% month on month.
The third quarter profit of the credit card business fell 8% year over year. Although the US economy continues to expand at a steady pace, with consumer spending resilience and corporate investment, customer spending increased 13% and loan size increased 9%, credit card business profits declined due to increased incentive costs, fees paid to partners, and credit provisions.
The cost side creates an amplification effect. Operating expenses for the third quarter were US$13.952 billion, down 2% year on year, a key factor in net profit leading the revenue growth rate by a large margin (+40% vs. +8%). The provision for credit losses was US$2,586 billion, up 6% year over year. Of this, US credit cards provided 1.9 billion US dollars, an increase of 4% over the previous year.
The return on capital remains strong. Citi returned a total of 4.1 billion US dollars (including stock repurchases and cash dividends) to common shareholders this season, and the total number of stock repurchases since the beginning of the year has reached 13.3 billion US dollars. In August, the board of directors raised the quarterly dividend to $0.67 per share.