Like its Wall Street rival JP Morgan Chase & Co (NYSE:JPM) - which reported its results earlier today - Citi recorded a 16% year-on-year decline in fixed income trading revenue which totalled US$2.88bn.
Citigroup Inc's (C.N) quarterly earnings beat Wall Street expectations on Thursday as cost-cutting, a unit sale and a gain in investment bank fees compensated for weak bond trading and a jump in provisions for consumer bad debts.
The bank's profit was $4.13 billion, up 8% from $3.84 billion a year ago.
For the three months ending in September, the lender clocked in with earnings per share of $1.42, besting analysts' estimates for profits of $1.32. Annualized return on equity was 7.3 percent.
JPMorgan, the largest US bank by assets, also topped expectations as loan growth and higher interest rates more than offset a 27 percent slide in bond trading.
JPMorgan on October 12 reported third-quarter net income available to common shareholders of $6.3 billion.
Last month, Gersprach warned that overall trading revenue would fall by 15 percent, worse than the 11 percent drop that materialized.
Bank of America Corp and Wells Fargo & Co, the second- and third-biggest USA banks by assets, are due to report results on Friday.
The main growth driver in the quarter was the global consumer business. Citigroup's shares have had a strong run-up this year, climbing 26 percent partly due to its share buyback plan. In North America, retail banking revenue rose 12%, excluding mortgages.
FILE PHOTO - Citigroup CEO Michael Corbat (C) chats with Thomson Reuters CEO Jim Smith and his wife Pam Kushmerick at the Thomson Reuters reception prior to the White House Correspondents' Association Gala in Washington, DC, U.S. on April 27, 2013.
"Investors are taking exception to both companies adding to their credit card loan reserves", said Jason Goldberg, analyst at Barclays.
Citi reported a 3 percent year-over-year increase in global consumer banking revenue. JPMorgan also had to set aside more money in the quarter to cover souring credit card loans.
Executives maintained earlier guidance for full-year net interest income, expenses, charge-offs and loan growth, indicating that they expect JPMorgan's other businesses to continue to offset capital markets pain.