Citigroup (C) today reported net income for the third quarter 2015 of $4.3 billion, or $1.35 per diluted share, on revenues of $18.7 billion.
This compared to net income of $2.8 billion, or $0.88 per diluted share, on revenues of $19.7 billion for the third quarter 2014.
CVA/DVA was $196 million ($127 million after-tax) in the third quarter 2015, compared to negative $371 million (negative $228 million after-tax) in the prior year period. Excluding CVA/DVA, revenues were $18.5 billion, down 8% from the prior year period, and earnings were $1.31 per diluted share, up 38% from prior year earnings of $0.95 per diluted share.
“The quarter had more than its fair share of volatility and our results speak to the resilience of our franchise globally. And despite revenue headwinds, we once again proved our ability to manage our risk, our expenses and our capital,” said Michael Corbat, Chief Executive Officer of Citigroup. “We remain on track to deliver our full-year efficiency and ROA targets. I feel good about the quality and consistency of our earnings over the course of this year, as we have continued to make solid progress against our core priorities.
“Citi Holdings was profitable again this quarter and its assets declined 20% year-over-year to $110 billion. Consistent utilization of our deferred tax assets helped us generate $14 billion of regulatory capital. So far this year we have returned over $4 billion of that capital to our shareholders in the form of share buybacks and common stock dividends,” Corbat concluded.
Citigroup revenues were $18.7 billion in the third quarter 2015, a decrease of 5% from the prior year period. Excluding CVA/DVA, revenues of $18.5 billion decreased 8% from the prior year period, as Citicorp revenues decreased by 5% and Citi Holdings revenues decreased 32%. Excluding CVA/DVA and the impact of foreign exchange translation5, Citigroup revenues decreased 2% from the prior year period, as a 1% increase in Citicorp revenues was more than offset by the decrease in Citi Holdings.
Citigroup’s net income increased 51% to $4.3 billion in the third quarter 2015 from the prior year period. Excluding CVA/DVA, net income of $4.2 billion increased 36%, primarily driven by lower operating expenses, lower net credit losses and a lower effective tax rate, partially offset by the lower revenues and a lower net loan loss reserve release.
Citigroup’s effective tax rate was 30% in the current quarter, a decrease from 41% in the prior year period (excluding CVA/DVA in each period).
Citigroup’s loans were $622 billion as of quarter end, down 5% from the prior year period, and down 1% in constant dollars. In constant dollars, 5% growth in Citicorp loans was more than offset by continued declines in Citi Holdings, driven primarily by continued reductions in the North America mortgage portfolio and the reclassification of loans to held-for-sale in connection with previously-announced agreements to sell OneMain Financial and Citi’s retail banking and credit card businesses in Japan.
North America GCB revenues of $4.8 billion decreased 4% compared to the prior year period, as lower revenues in Citi-branded cards and Citi retail services were partially offset by higher revenues in retail banking. Citi-branded cards revenues of $1.9 billion decreased 9% versus the prior year period, reflecting the continued impact of lower average loans as well as an increase in acquisition and rewards costs. Citi retail services revenues of $1.6 billion declined 2% versus the prior year period, reflecting the continued impact of lower fuel prices and higher contractual partner payments. Retail banking revenues rose 3% from the prior year period to $1.3 billion, reflecting 7% growth in average loans, 7% growth in checking deposits and improved deposit spreads, partially offset by a lower mortgage repurchase reserve release.