Citigroup continues slow pull away from mortgage originations

Retail banking as a whole increases

The latest numbers from Citigroup’s third-quarter earnings show the megabank continues to pull away from mortgage originations as it focuses on other lines of business.

According to the bank's third-quarter earnings, mortgage originations plummeted to $3.2 billion, significantly down from $6.5 billion in the third quarter of 2016.

Looking at only this year, mortgage originations started the year out at $3.8 billion in the first quarter and fell to $3.1 billion in the second quarter.

Excluding mortgage, retail banking at Citigroup performed well, with revenues increasing 12% year-over-year, driven by continued growth in loans and assets under management, as well as a benefit from higher interest rates.

Also on the mortgage side, Citigroup’s third-party mortgage servicing portfolio continued to fall, declining to $49.1 billion in the third quarter 2017 from $147.6 billion in the third quarter 2016. 

While Citi has not provided much explanation on why it is exiting mortgage servicing, it could perhaps be the regulatory overhang became more than the bank could bear. 

For example, earlier this year, the Consumer Financial Protection Bureau fined CitiFinancial Servicing and CitiMortgage a total of $29 million for foreclosure-related issues, but without more definitive information from the bank, the industry is left to speculate.

As a whole, Citigroup reported net income of $4.1 billion, or $1.42 per diluted share. It also recorded revenues of $18.2 billion, beating estimates by $270 million.

This is compared to net income of $3.8 billion, or $1.24 per diluted share, on revenues of $17.8 billion for the third quarter 2016.

“We delivered a very strong quarter, showing the balance of our franchise by both product and geography and highlighting our multiple engines of client-led growth,” Citi CEO Michael Corbat said of the results. “We had revenue increases in many of the products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses.”

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