Citigroup shares rise as earnings beat estimates on trading

Analysts’ Estimates

Moshe Orenbuch, an analyst with Credit Suisse Group AG, had estimated fixed-income trading revenue of $2.96 billion. David Trone, a JMP Securities LLC analyst, predicted $3.11 billion.

“Every one of our products contributed,” Gerspach said on a conference call with journalists. “Market volumes are still down slightly, even from last year, even the prior quarter, but the market conditions were better this quarter in that there was better client flow.”

Revenue from stock trading, run by Derek Bandeen in London, posted a 76 percent increase to $510 million. Richard Staite, an analyst in London with Atlantic Equities LLP, had estimated $550 million.

Investment-banking revenue gained 26 percent to $926 million, with increases in fees from underwriting shares and bonds and advising on mergers.

‘Showed Momentum’

“Our core businesses showed momentum during the quarter as we increased lending and generated higher operating revenues,” Pandit said in the statement.

Pandit agreed in September to sell Citigroup’s stake in the Smith Barney joint venture to its partner, Morgan Stanley, after the two firms argued over the brokerage’s worth. The deal forced Citigroup to write down the value of its stake.

Losses at the Citi Holdings division, which includes the Smith Barney investment, almost tripled to $3.56 billion. Mark Mason runs the unit, which had $171 billion of assets at the end of quarter, a 31 percent decline from last year.

Citigroup rose 19 percent during the quarter, more than any other lender in the KBW Bank Index. Bank stocks gained as the Federal Reserve’s effort to stimulate the economy boosted profit at lenders, according to an Oct. 1 note from KBW Inc. analyst David Konrad. The Fed said in September it would buy $40 billion more in mortgage securities each month.

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