A mammoth, $4.7bn (£2.9bn) writedown drove Citigroup's third-quarter profits down by nearly 90 per cent – but America's third-largest bank still managed to beat Wall Street expectations yesterday thanks to strength in its bond trading business.
Third-quarter net income fell to $486m, against $3.77bn a year earlier. The drop came after the bank agreed to sell its stake in the Morgan Stanley Smith Barney brokerage business for less than it had hoped, taking a writedown.
But Citi drew strength from its securities and banking arm, whose profits were up nearly 70 per cent as its fixed-income revenues surged. A sizeable tax benefit also boosted the bottom line, helping the bank surpass market hopes.
Citigroup's chief financial officier, John Gerspach, said an uptick in mortgage lending augured well for the US housing market.
Profits in Citigroup's international consumer-banking division were down 3 per cent.
Goldman set for profit but still gloomy
Further signs of the extent of the City slowdown over the summer will emerge today when Goldman Sachs unveils third-quarter results. It is expected to post profits towards $400m (£250m), against a loss a year ago, mainly thanks to America and the Far East – leaving City bankers facing low bonuses and the risk of losing their jobs
Figures just filed at Companies House for the London arm show investment banking revenues down a third in the first half of the year to $421m.