Shares of Citigroup (C) were lower in today’s trading even as the investment bank and financial services company reported robust Q3 results. The bank’s Q3 earnings declined by 7% year-over-year to $1.51 per share but were above analysts’ expectations of $1.31 per share.
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Citi’s Rise in Q3 Revenues Was Driven by Equity Markets
Furthermore, Citi’s revenues increased by 1% year-over-year to $20.3 billion, beating Street estimates of $19.86 billion. Notably, the bank’s revenue from the equity markets soared 32% year-over-year to $1.24 billion.
However, Citi’s net interest income (NII) declined 3% year-over-year to $13.4 billion due to narrowing margins. The bank indicated that it expects its NII (excluding its markets business) to stay flat in the fourth quarter, signaling ongoing challenges in maintaining margin growth. NII is the difference between what the bank earns on loans and pays on deposits.
Furthermore, Citi expects to generate FY24 revenues between $80 billion and $81 billion.
CEO Jane Fraser Comments on Q3 Results
Citi’s CEO, Jane Fraser, commented on the results, “This quarter contains multiple proof points that we are moving in the right direction and that our strategy is gaining traction, including positive operating leverage for each of our businesses, share gains and fee growth.”
It is important here to note that Jane Fraser took charge in March 2021 and since then, has focused her efforts on streamlining the bank by scaling back its global operations and reducing headcount.
Is Citibank a Buy, Sell, or Hold?
Analysts remain cautiously optimistic about Citi stock, with a Moderate Buy consensus rating based on eight Buys and six Holds. Over the past year, Citi has increased by more than 60%, and the average Citi price target of $72.04 implies an upside potential of 10.8% from current levels. However, these analyst ratings are likely to change following Citi’s Q3 results today.
