Citigroup Beats on Profit as Trading Revenue Falls Less Than Expected

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Citigroup's second-quarter profit fell 3 percent as the bank had to set aside more money to cover souring loans, especially in its credit card business.

Citigroup Inc. said Friday it had net income of $3.9 billion, or $1.28 a share, in the second quarter, down from $4.0 billion, or $1.24 a share, in the year-earlier period.

Q2 trading revenue fell 7% Y/Y to $3.9B from $4.2B; CFO John Gerspach had predicted last month that trading revenue would fall 12%-13% from a year ago. Analysts had expected $1.21 a share. The results still beat analysts' forecasts of $1.21 a share, according to FactSet. Like its competitors, it also saw a drop in trading revenue caused by quieter markets.

The bank did not offer guidance in its press release, but the consensus estimates call for third-quarter EPS of $1.30 on revenues of $17.72 billion.

However, the drop-off wasn't almost as sharp as anticipated, or as sharp as J.P. Morgan's.

Citi's institutional clients group houses the United States bank's advisory, underwriting and sales and trading businesses, as well as treasury and trade solutions, corporate lending, private banking and securities services.

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Loans at the end of the period were up about 2 percent from a year earlier, as well from the end of March, indicating a new momentum for lending.

Shares traded down less than 0.1% at $67.00 in the premarket this morning, having closed on Thursday at $67.02.

Citigroup did benefit from higher short-term interest rates, which are passed on to credit-card borrowers. Revenue at the consumer unit rose 5% to $8.035 billion from $7.674 billion a year ago.

Growth was driven by institutional and global consumer banking, but slowed by falls in corporate banking.

Quarterly expenses rose 1% to $10.506 billion from $10.369 billion a year earlier.

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