Citigroup (C) Tops Q3 EPS by 4c

Citigroup (NYSE: C) reported Q3 EPS of $1.31, $0.04 better than the analyst estimate of $1.27. Revenue for the quarter came in at $18.5 billion versus the consensus estimate of $18.56 billion.

Michael Corbat, Chief Executive Officer of Citigroup, said, “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. We remain on track to deliver our full-year efficiency and ROA targets. I feel good about the quality and consistency of our earnings over the course of this year, as we have continued to make solid progress against our core priorities.

“Citi Holdings was profitable again this quarter and its assets declined 20% year-over-year to $110 billion. Consistent utilization of our deferred tax assets helped us generate $14 billion of regulatory capital. So far this year we have returned over $4 billion of that capital to our shareholders in the form of share buybacks and common stock dividends. Our tangible book value surpassed $60 per share and our Common Equity Tier One Capital ratio increased to 11.6% on a fully-implemented basis. Challenging environments have become the norm, but the work we have done to make our firm simpler, smaller, safer and stronger has given us a resilient and sturdy platform from which to operate,” Mr. Corbat concluded.

Citigroup’s allowance for loan losses was $13.6 billion at quarter end, or 2.21% of total loans, compared to $16.9 billion, or 2.60% of total loans, at the end of the prior year period. Net loan loss reserve releases decreased $536 million from the prior year period to $16 million. Total non-accrual assets fell 17% from the prior year period to $6.6 billion. Consumer non-accrual loans declined 23% to $4.8 billion, while corporate non-accrual loans increased 15% to $1.6 billion, primarily reflecting downgrades in the North America energy portfolio. Overall, more than two-thirds of the loans added to Citi’s corporate nonaccrual loans in the third quarter 2015 were performing as of quarter end.

Citigroup’s loans were $622 billion as of quarter end, down 5% from the prior year period, and down 1% in constant dollars. In constant dollars, 5% growth in Citicorp loans was more than offset by continued declines in Citi Holdings, driven primarily by continued reductions in the North America mortgage portfolio and the reclassification of loans to held-for-sale in connection with previously-announced agreements to sell OneMain Financial and Citi’s retail banking and credit card businesses in Japan.

Citigroup’s deposits were $904 billion as of quarter end, down 4% from the prior year period, and were approximately unchanged in constant dollars. In constant dollars, Citicorp deposits increased 4% from the prior year period, driven by a 10% increase in Institutional Clients Group (ICG) deposits and a 2% increase in Global Consumer Banking (GCB) deposits. In constant dollars, Citi Holdings deposits declined 83%, driven by the previously disclosed reclassification of Japan retail banking deposits to other liabilities during the fourth quarter 2014, as well as the transfer of MSSB deposits to Morgan Stanley, which was completed as of the end of the second quarter 2015.

Citigroup’s book value per share was $69.03 and tangible book value per share was $60.07, each as of quarter end, representing 3% and 5% increases, respectively, compared to the prior year period. At quarter end, Citigroup’s Common Equity Tier 1 Capital ratio was 11.6%, up from 10.6% in the prior year period. Citigroup’s Supplementary Leverage Ratio for the third quarter 2015 was 6.8%, up from 6.0% in the prior year period. During the third quarter 2015, Citigroup repurchased approximately 36 million common shares and returned a total of $2.1 billion to common shareholders in the form of share repurchases and common stock dividends.

For earnings history and earnings-related data on Citigroup (C) click here.

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