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Citigroup profit rises on asset sale gain, lower costs

An employee uses a touch-screen monitor as a customer stands at a teller service counter inside a Citigroup Inc. Citibank branch in this file photo.

Vivek Prakash/Bloomberg

Citigroup Inc reported a higher quarterly profit as it kept costs lower, recorded a large gain from an asset sale and had a smaller-than-expected decline in trading revenue.

Revenue from trading bonds and stocks fell 11 per cent from a year earlier but the figure was not as bad as the 15 per cent decline Chief Financial Officer John Gerspach projected at a conference three weeks before the end of the third quarter.

The company's shares were slightly higher at $75 (56.90 pounds)in premarket trade.

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Major Wall Street banks have seen a steady decline in market trading activity, which was boosted last year on higher global macroeconomic uncertainty, especially around Brexit and the U.S. presidential election.

The fourth-biggest U.S. bank by assets said on Thursday that net income rose to $4.13-billion in the third quarter ended Sept. 30 from $3.84-billion a year earlier.

Earnings per share rose about 15 per cent to $1.42 from $1.24 as the company shrank the number of shares outstanding by 7 per cent – buying back stock under its biggest capital return plan approved by the U.S. Federal Reserve.

Results included a $355-million gain, worth 13 cents a share, from the previously disclosed sale of a fixed income market analytics and index business. Analysts on average had expected earnings of $1.32, according to Thomson Reuters I/B/E/S. It was not immediately clear if the numbers were comparable.

The bank's total revenue rose about 2 per cent to $18.17-billion. Expenses were $10.17-billion, 2 per cent lower than last year.

Since taking the helm five years ago, Chief Executive Michael Corbat has pushed to improve shareholder returns by cutting expenses, shrinking the bank and freeing up capital to buy back stock.

Return on tangible common equity rose to 8.4 per cent from 7.8 per cent. Corbat's target for the measure of profitability is 10 per cent in 2019 and 14 per cent in the longer-term.

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JPMorgan Chase & Co, the biggest U.S. bank by assets, earlier on Thursday reported a better-than-expected quarterly profit, but said its bond trading revenue slumped 27 per cent.

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