Citi Beats Street As Consumer And Cards Show Gains

Citigroup’s headline numbers showed a sizable quarterly loss on the newly enacted tax law – but excluding that $22 billion charge and the resulting $18 billion negative tally on the bottom line, results beat expectations.

The adjusted earnings per share was $1.28, up 4 percent year over year and 9 cents better than the Street, per a Reuters report. The top line was up 1.4 percent to $17.26 billion, better than the projections of $17.22 billion.

Similar to other banks that have reported thus far into earnings season, institutional results declined year over year as investment banking and trading results were off 1 percent. As was seen with JPMorgan, Citi also had exposure to South African furniture firm Steinhoff International, whose troubles resulted in losses on derivatives to the tune of $130 million.

Turning to consumer-focused results, CEO Michael Corbat told analysts during an earnings conference call that credit conditions are favorable, pointing out that consumer banking is up 4 percent, with international growth at 7 percent.

Normal seasoning across credit metrics, said management, led to 289 basis points in NCLs across branded cards, where revenues were $2.2 billon, and loans up by 6 percent. Purchase sales were up 10 percent, management said on the call, and guidance in this segment was maintained at 300 basis points to 325 basis points.

Digital initiatives are strong, pointed out CFO John Gerspach, who said that “we continue to drive transaction volumes to lower cost channels, and digital engagement remains strong.” There was a 13 percent increase in total active digital users, with 21 percent growth among mobile users versus last year.

The U.S. economy remains robust, said management, and consumers with higher take-home pay could drive increased discretionary spending. Management also pointed toward international trends, where the consumer remained strong in Asia and credit card spending grew in Mexico, earlier than planned.