--> C US trading +0.15% 70k shares traded
Citigroup beats by $0.07, beats on revs
- Reports Q2 (Jun) earnings of $1.28 per share, excluding non-recurring items, $0.07 better than the Capital IQ Consensus of $1.21; revenues rose 2.0% year/year to $17.9 bln vs the $17.38 bln Capital IQ Consensus.
- Net income of $3.9 billion decreased 3%, as the higher revenues were more than offset by higher cost of credit and operating expenses, as well as a higher effective tax rate
- Common Equity Tier 1 capital ratio grew to 13.0%, well above the 11.5% we believe we need to prudently operate the firm. Our recently announced 2017 capital plan includes a return of $18.9 billion enabling us to reduce the amount of capital we hold. We are clearly on course to increase both the return on capital and return of capital for our shareholders.
- Citigroup's operating expenses were up slightly at $10.5 billion in the second quarter 2017.
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Citigroup's cost of credit in the second quarter 2017 was $1.7 billion, a 22% increase, driven by an increase in net credit losses of $94 million and a net loan loss reserve release of $16 million, compared to a net release of $256 million mostly related to legacy assets in the prior year period.
- Citigroup's end of period loans were $645 billion as of quarter end, up 2% from the prior year period.
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Banking revenues of $4.8 billion increased 19% (including gain / (loss) on loan hedges).
- Investment Banking revenues of $1.5 billion were up 22% versus the prior year period, reflecting strength in equity underwriting and advisory, as well as continued momentum in debt underwriting.
- Advisory revenues increased 32% to $314 million, equity underwriting revenues increased 70% to $295 million and debt underwriting revenues increased 9% to $877 million.
- Fixed Income Markets revenues of $3.2 billion in the second quarter 2017 decreased 6% primarily reflecting lower G10 currencies revenue, given low volatility in the current quarter and the comparison to higher Brexit-related activity a year ago.
- Equity Markets revenues of $691 million decreased 11%, reflecting episodic activity in the prior year period, as well as low volatility in the current quarter. Securities Services revenues of $584 million increased 10% driven by growth in client volumes across the global custody business.
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Global Consumer Banking
- North America GCB revenues of $4.9 billion increased 5%, as higher revenues in Citi-branded cards and Citi retail services were partially offset by lower revenues in retail banking, driven by lower mortgage revenues. North America GCB net income was $670 million, down 18%, driven by higher cost of credit and higher operating expenses, partially offset by the higher revenues. North America GCB cost of credit increased 27% to $1.3 billion. The net loan loss reserve build in the second quarter 2017 was $103 million, compared to a build of $56 million in the prior year period, largely supporting volume growth and the impact of changes in collections activity in cards.
- International GCB revenues increased 4% to $3.1 billion. International GCB net income decreased 3% to $455 million. Operating expenses increased 3% both on a reported and constant dollars basis, versus the prior year period. Credit costs increased 15% on a reported basis and increased 18% in constant dollars.
- North America GCB revenues of $4.9 billion increased 5%, as higher revenues in Citi-branded cards and Citi retail services were partially offset by lower revenues in retail banking, driven by lower mortgage revenues. North America GCB net income was $670 million, down 18%, driven by higher cost of credit and higher operating expenses, partially offset by the higher revenues. North America GCB cost of credit increased 27% to $1.3 billion. The net loan loss reserve build in the second quarter 2017 was $103 million, compared to a build of $56 million in the prior year period, largely supporting volume growth and the impact of changes in collections activity in cards.