Citigroup net income rises 12% on low effective tax rate
By
Citigroup Inc., the parent company of Citibank Nigeria weekend, reported a 12 percent growth in net income for the third quarter 2018 of $4.6 billion as compared with its previous figure in the same period in 2017.
The increase in net income reflected a lower effective tax rate as well as lower expenses and cost of credit, as revenues remained largely unchanged, as explained in a press release from the group. The group’s effective rate was 24 percent in Q3 2018 as compared with 31 percent in Q3 2017.
According to the press release, revenues of $18.4 billion were largely unchanged from the prior-year period. Excluding the gains on sale of about $580 million of a fixed income business in 2017 period and $250 million of an asset management business in Mexico as well as the impact of foreign exchange translation, revenues increased 4 percent driven by growth in Institutional Clients Group (ICG).
“Our results this quarter showed solid year-on-year revenue growth across many of our businesses including Fixed income, Treasury and Trade Solutions, Securities Services, the Private Bank and our consumer franchise in Mexico,” Michael Corbat, CEO of Citigroup said.
Cost of credit was approximately $2 billion, a 1 percent decrease primarily driven by lower reserve builds in Citi Retail Services and Citi-Branded Cards in North America Global Consumer Banking (GCB) and partially offset by a net reserve build in ICG.
Operating expenses of $10.3 billion in the third quarter 2018 also declined by 1 percent, as higher volume-related expenses and investments were more than offset by efficiency savings and the wind-down of legacy assets, the group explained further.
“We also grew loans and deposits while continuing to prudently manage risk as demonstrated by the stability of our credit portfolio. We returned $6.4 billion of capital to common shareholders through buybacks and dividends during the quarter,” Corbat said.
Total loans and deposit in the third quarter got a boost by 3 percent and 4 percent respectively with Loans totalling $675 billion and deposits totalling $1.005 trillion.
“And over the past twelve months, we’ve reduced our common shares outstanding by over 200 million or 8 percent. Through a combination of earnings growth and capital return, our earnings per share were 22 percent higher than one year ago.”
Earnings per share increased by 22 percent to $1.73 from $1.42 per diluted share in the prior-year period, driven by the growth in net income and an 8 percent reduction in average diluted shares outstanding.
For nine months ended September 2018, the CEO said the group had grown their consumer and institutional revenues by 4 percent and operated with an efficiency ratio of 57.3 percent and a return on Tangible Common Equity of 11.2 percent.
Citigroup’s net income increased by 14 percent to $13.7 billion as compared with $12.1 billion in the prior-year period and revenue rose marginally by 1 percent to $55.7 billion as of September 2018.
“We are firmly on track to deliver on our full year 2018 financial targets. At the same time, we continue to make targeted investments which will fund future growth and enhance our ability to serve clients,” Corbat said.
Shares of Citigroup rose 2.14 percent to N69.84 at the close of the market on Friday in New York Stock Exchange. The stock had declined 6 percent this year through Friday (i.e. year-to-date).