Citigroup Inc, the No. 3 U.S. bank by assets, reported a 51% jump in quarterly profit as lower costs more than made up for a fall in revenue amid increased market volatility and uncertainty about the timing of a U.S. interest rate hike.
U.S. banks including Citi, JPMorgan Chase & Co and Bank of America Corp are cutting costs to boost earnings as overnight fund rates stay near zero and fixed-income trading, long a source of revenue growth, shows no sign of picking up.
Citi's shares rose 3% to $52.32 in premarket trading on Thursday.
"The quarter had more than its fair share of volatility... and despite revenue headwinds, we once again proved our ability to manage our risk, our expenses and our capital," Chief Executive Michael Corbat said in a statement.
Citi's operating expenses fell 18% to $10.7 billion as the lender put most of the problems stemming from the financial crisis behind it and exited businesses where profits and future prospects were not worthwhile.
Total revenue in Citicorp, which houses its core businesses, declined 2%. Revenue from Citi Holdings, which holds the businesses marked for sale, fell 32% as assets under the unit shrank 20%.
Citi's institutional clients group was the only unit to post a rise in revenue, helped by higher private banking income and equity market revenue.
Revenue from fixed income markets fell about 16% to $2.58 billion, reflecting a trend seen in the results of other big U.S. banks.
JPMorgan and BofA also reported a fall in third-quarter revenue this week, hurt by muted trading.
Citigroup's adjusted return-on-assets rose to 0.91% from 0.64%, meeting Corbat's target of at least 0.9% for the year.
Net income rose to $4.29 billion, or $1.35 per share, in the third quarter from $2.84 billion, or 88 cents per share, a year earlier, when the bank had taken a near $2 billion charge for litigation and restructuring costs.
Revenue fell about 5% to $18.69 billion.
Adjusting for some accounting items, net profit rose 35.7% to $4.16 billion, or $1.31 per share, beating the average analyst estimate of $1.28 per share, according to Thomson Reuters I/B/E/S.
The results reflect Citi's success in winning approval from the Federal Reserve to buy back stock. The number of shares outstanding fell 2% from a year earlier, boosting earnings per share.