Citigroup Inc (C) Q3 Earnings Beat, Despite Very Weak Fixed Income Performance

US stocks closed lower on Thursday as Wall Street digested earnings from some of the top financial companies.

"We had revenue increases in numerous products we have been investing in, tightly managed our expenses, and again saw loan growth in both our consumer and institutional businesses". Citi reported a 3% year-on-year rise in global consumer banking revenue, while in North America retail banking jumped by 12%, excluding mortgages.

Both banks said that the increases were a normal part of the credit cycle and did not point to evidence of consumers under stress, but that explanation did not reassure analysts. Analysts expressed concerns about higher reserves set aside for bad loans and about a weak trading performance.

USA banks have spent hundreds of millions of dollars attracting consumers to their credit cards with offers of cash-back on spending, plane tickets and free borrowing on balances transferred from other cards.

Citi-branded cards in the USA provide about 10 percent of Citigroup revenue and profits and are seen by Corbat as one of the company's best shots at growing profits. Earnings per share rose about 15 percent to $1.42, bolstered by the bank's move to reduce its shares outstanding by 7 percent. "Don't freak out. It doesn't mean it's going to be 21 months before we see growth in anything", Chief Financial Officer John Gersprach told analysts.

Investment banking revenue was $4.6 billion in the quarter, up 16 percent from a year earlier.

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Like its peers on Wall Street, Citigroup was expecting another tough quarter for trading revenue amid tepid volatility.

Despite its revenue increasing 2% year-over-year, the company notes there were some black marks in its earnings report.

But hopes President Donald Trump would stimulate trading activity and greater economic demand through tax reforms and a loosening in financial regulations have failed to materialize.

While Citi's trading desks focus heavily on bond and currency trading, it was the bank's other trading desks that stood out.

And the trend bodes poorly for Goldman Sachs Group Inc, which has recently struggled more in that area than other Wall Street banks.

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