Citigroup fends off ultra-low interest rates, beats profit estimates in Q3

Daniel Fowler
October 14, 2020

Since then, chief executive Mike Corbat announced he would retire earlier than expected in February, handing the reins to Jane Fraser who has highlighted improving risk and control systems as a priority. The COVID-19 crisis has so far infected more than 8 million people in the United States and caused over 220 thousand deaths.

WFC shares -1.7%, with the damage somewhat mitigated by an upside surprise on revenue, which the company attributed largely to monetary and fiscal stimulus efforts. In comparison, Citigroup was trading at a much higher £62.71 per share at the start of the year, but had plummeted to £27.32 per share in March.

JPMorgan CEO Jamie Dimon noted that the total size of the bank's reserves for loan losses still rounded to $34 billion, roughly the same as the previous quarter. For earnings per share, their estimate was capped at 71.80 pence per share. The investment bank said net credit losses in the third quarter declined to £1.47 billion versus £1.70 billion in the prior quarter. The results beat analysts' expectations for earnings of $2.23 a share, according to FactSet. Overall cost of credit, it added, also slid to £1.74 billion from £6.10 billion in Q2.

Fixed income markets revenues of $3.8 billion increased 18 percent compared to $3.2 billion in Q3 2019, which Citi said was driven by strong performance across spread products and commodities. The sanction - which some analysts anticipated would be booked later - contributed to a 5% jump in expenses to $11 billion in the third quarter.

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Wells Fargo & Co. returned to profitability in the third quarter after the lender writing off fewer loans amid a downturn related to the COVID-19 pandemic.

But after almost $20 billion in credit costs in the first half of 2020, the bank reported just $611 million in credit costs in the third quarter.

The much lower credit costs are an indicator of how the U.S. economy has stabilized after the upheaval earlier in the year following broad lockdowns to contain the coronavirus.

At the time of writing, Citigroup is valued at £70.57 billion and has a price to earnings ratio of 7.60.

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