A sharp fall in legal expenses at Citigroup helped its profits to soar and offset a fall in revenues at America’s third-largest lender.
Net income for the third quarter hit $4.3 billion, up 51 per cent, as the bank’s legal bill fell from $1.6 billion to $376 million while revenues dropped 5 per cent to $18.7 billion year on year.
A fall in trading income was behind the revenue dip as Citigroup’s fixed-income business recorded a 16 per cent drop in earnings to $2.6 billion because of clients sitting on the sidelines worried about the economic outlook.
By contrast, turmoil in world stock markets over the summer helped to boost equity trading revenues, which rose 31 per cent to $996 million year on year.
Michael Corbat, the chief executive of Citigroup, said that the bank had made “solid progress” in the three months to September 30 and that he felt “good about the quality and consistency” of the bank’s earnings.
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He added: “The quarter had more than its fair share of volatility and our results speak to the resilience of our franchise globally. And, despite revenue headwinds, we once again proved our ability to manage our risk, our expenses and our capital.”
Citigroup’s “bad bank”, Citi Holdings, which was set up to manage its legacy toxic assets, reported a 32 per cent fall in revenues to $1.4 billion as it continued to sell non-core assets, which were reduced by 20 per cent to $110 billion compared with the previous year.
The turnaround in the bank’s performance has allowed it to return money to investors and it bought back $2.1 billion of its shares, boosting investors’ returns over the quarter.
The shares rose nearly 4.5 per cent in New York to $52.96, valuing the bank at more than $150 billion.