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Citigroup Stock Higher As Capital Markets Revenues Drive Q3 Earnings Beat

Surging capital markets revenues, as well as the release of more than billion in previous loan loss reserves, helped Citigroup blast Wall Street's Q3 earnings forecast.

Citigroup  (C) - Get Citigroup Inc. Report posted stronger-than-expected third quarter earnings Thursday as capital markets revenues and the release of loan loss reserves boosted its bottom line. 

Citigroup said earnings for the three months ending in September were pegged at $2.15 per share, up 58% from the same period last year and firmly ahead of the Street consensus forecast of $1.65 per share. Citigroup also boosted its bottom line with the release of $1.16 billion in loan loss reserves, set aside last year during the peak of the pandemic. 

Group revenues, Citigroup said, fell 13% to $17.2 billion, but came in just ahead of analysts' estimates of a $16.9 billion tally.

“The recovery from the pandemic continues to drive corporate and consumer confidence and is creating very active client engagement as you can see through our strong results in Investment Banking and Equity Markets, both up approximately 40% year-over-year, in addition to double- digit fee growth in Treasury and Trade Solutions as we help our clients reposition their supply chains," said CEO Jane Fraser "And while strong consumer balance sheets have impacted lending, we are seeing higher consumer spending across our cards products."

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“We are moving forward with urgency on our top priorities in order to responsibly narrow the returns gap with our peers: the Transformation, refreshing our strategy and building a culture of excellence," she added. "So far this year, we have returned close to $11 billion to shareholders through a healthy dividend and stock repurchases. We remain committed to returning excess capital over and above the amount necessary to invest in our franchise and to maintain our safety and soundness."

Citigroup shares were marked 1.65% higher in pre-market trading immediately following the earnings release to indicate and opening bell price of $71.42

Earlier this week, JPMorgan Chase  (JPM) - Get JPMorgan Chase & Co. (JPM) Report set a high bar for sector earnings with stronger-than-expected third quarter profits powered by deal-making fees in its investment banking division.

JPMorgan said earnings for the three months ending in September were pegged at $11.7 billion, or $3.74 per share, up 28.1% from he same period last year and well ahead of the Street consensus forecast of $3.00 per share. Removing the benefit of a $2.1 reserve release, as well as other one-off items, JPMorgan's first quarter profit was $9.6 billion.

Managed revenues, JPMorgan said, rose 1.7% to $30.44 billion, just ahead of analysts' estimates of a $29.76 billion tally, while net interest income rose 1% to $13.2 billion. Investment banking fees, JPMorgan said, powered a 3% gain for non-interest revenues, which hit $17.3 billion.