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Citigroup earnings beat Wall Street, but shares fall on concerns of rising credit costs

Citi reported a 3 percent year-over-year increase in global consumer banking revenue. In North America, retail banking revenue rose 12 percent, excluding mortgages. Citi cited “continued growth in loans and assets under management,” as well as higher interest rates.

The bank’s international consumer business saw an 8 percent revenue increase, driven by higher loans and deposit volumes growth.

Citi’s end-of-period loans, meanwhile, rose 2 percent to $653 billion, while deposits increased by 3 percent to $964 billion.

“We had revenue increases in many of the products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses,” Citigroup CEO Michael Corbat said in a release.

Citigroup’s $2.877 billion fixed-income trading revenue represents a 16 percent year-over-year decline. The sharp decline was offset by a 16 percent increase in equity trading revenue. Earlier Thursday, JPMorgan reported third-quarter earnings that beat Wall Street estimates. However, the bank also reported a 27 percent drop in bond trading revenue.

Shares of Citigroup have risen 26 percent this year, easily outperforming the broader market. The S&P 500 has gained 14 percent in 2017.

Citigroup’s stock has also outperformed those of other big banks. Shares of JPMorgan Chase and Bank of America are up 11.9 percent and 16.9 percent, respectively.

John Heagerty, research analyst at Atlantic Equities, said in a note last month the stock could see further gains.

“We believe the combination of an inexpensive valuation, substantial capital return, declining cost to income ratio and rising ROE should deliver above peer-group share price performance for C over the next 12-18 months,” Heagerty said.

Citigroup could also benefit from tighter monetary policy in the near future. The Federal Reserve signaled a December rate hike in the summary of its Sept. 20 meeting.

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