by Tatiana Bautzer and Manya Saini
(Reuters) – Citigroup reported a 9 percent drop in third-quarter net profit on Tuesday as the bank increased provisions to deal with possible loan defaults, particularly on defaults on credit card.
The third largest bank in the United States recorded a net profit of $3.2 billion for the third quarter, or $1.51 per share, compared to $3.5 billion a year earlier ($1.63 dollar).
At the end of September, Citi’s total allowance for credit losses stood at about $22.1 billion, up from $20.2 billion a year earlier.
In the third quarter, revenues nevertheless increased by 1% to reach $20.3 billion.
Citi benefited from a rebound in capital markets like its rivals JPMorgan Chase and Wells Fargo, as corporate clients issued more debt and equity.
The investment bank performed well for the second consecutive quarter, posting revenues up 31% to $934 million. Wall Street executives are optimistic that last month’s interest rate cut by the Federal Reserve (Fed) will pave the way for more deals and IPOs.
Services revenue increased 8% to $5 billion, driven by a 24% rise in securities services revenue to $1.4 billion.
The rise in stock markets at the end of the quarter pushed revenue from equity trading to $1.2 billion, an increase of 32%, and revenue from all markets increased by 1%.
However, revenues in retail banking fell by 8%.
(Reporting by Tatiana Bautzer in New York and Manya Saini in Bengaluru, writing by Lananh Nguyen and Devika Syamnath, Bertrand De Meyer, editing by Blandine Hénault)
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