Citigroup profit beats on consumer banking but revenue disappoints

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Citigroup's quarterly profit topped Wall Street estimates on strength in its consumer banking business, but revenue missed expectations, weighed down by lower debt underwriting.

The third-largest US bank by assets, like its peers, has benefited from a cut in income tax rates and an expanding US economy that has fueled demand for loans.

The bank's total loans rose 5pc in the second quarter. Bigger rival JPMorgan Chase & Co reported a 7pc rise in average core loans earlier on Friday.

Citigroup's shares were down 1.5pc in premarket trading.

Overall, revenue rose about 2pc to $18.47bn but came in slightly below the average expectation of $18.51bn.

Debt underwriting revenue fell 20pc in the wake of rising interest rates.

The bank's fixed income trading revenue fell 6pc, while equity trading revenue rose 19pc. Total markets and securities services revenue fell 1pc.

Last month, Chief Financial Officer John Gerspach said he expected trading revenue to be "flattish" compared with a year earlier.

Net income rose 16pc to $4.49bn in the second quarter ended June 30, driven by a 14pc jump in net income for its global consumer banking.

Earnings per share rose to $1.63 from $1.28 and topped analysts' average estimate of $1.56, according to Thomson Reuters I/B/E/S.

Chief Executive Michael Corbat said in a statement on Friday that given the results he remained confident of achieving the financial targets set last year.

Corbat had last year outlined an ambitious plan to grow profit and return at least $60bn to shareholders.

At its first investor day in nine years in July last year, Citigroup executives detailed ways they intend to generate more revenue, cut unnecessary costs, use capital more wisely and get back to building businesses after a long period of divestitures.

The bank's provision for income tax fell by $351m in the reported quarter, following President Donald Trump's corporate tax rate cuts.

Through Thursday, Citigroup shares are down 7.9pc for the year, compared with the 1pc drop in the broader KBW Bank Index.

JPMorgan Chase & Co's quarterly profit topped Wall Street's expectations on Friday, as trading revenue came in much higher than expected and demand for loans increased on the back of a strengthening US economy.