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Citigroup profit surges 48%, driven by strong trading revenue

A Citibank sign in front of one of the company’s offices in California.

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Citigroup reported stronger-than-expected results for its third quarter on Thursday as trading revenue helped the company deliver a major increase in profits.

The bank reported $2.15 in earnings per share on $17.15 billion in revenue. Wall Street was anticipating earnings per share of $1.65 on revenue of $16.97 billion, based on Refinitiv consensus estimates.

Net income came in at $4.6 billion, compared with $3.1 billion a year ago. That is a 48% increase year over year.

Trading revenue for fixed income and equity markets topped estimates at $3.18 billion and $1.23 billion, respectively. Analysts expected $3.07 billion in revenue from fixed income trading and $909.7 million in revenue from equities trading, according to StreetAccount estimates. Equity trading revenue was up 40% year over year.

“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 chain,” CEO Jane Fraser said in a statement.

The bank’s shares were down less than 1% in morning trading after the earnings report.

Citi released $1.16 billion in loan loss provisions, resulting in a net benefit of $192 billion for the quarter. Banks built up massive reserves during the economic downturn last year but have released them as the economy has recovered, boosting their bottom lines.

In addition to the results, investors will look to Citi’s conference call for its expectations on the economic recovery, interest rates and loan creation. They will also seek new insight into Fraser’s plan for the bank, which she took over earlier this year.

For the second quarter, Citi beat expectations on the top and bottom lines thanks in part to a $1.1 billion benefit for loan loss reserves. The bank also announced in April that it was exiting retail operations in 13 non-U.S. countries.

On Wednesday, JPMorgan kicked off bank earnings season by beating profit expectations on a $1.5 billion boost from loan loss reserves. Wells Fargo, Morgan Stanley and Bank of America also beat expectations Thursday.

Entering Thursday, shares of Citi were up about 14% year to date, which trailed the returns of the KBW Bank Index and some of its large-cap peers.

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