Citi profits up as it exits 11 consumer bank markets
New York (AFP) - Citigroup Tuesday reported higher third-quarter quarterly earnings on a big jump in revenues as it unveiled plans to exit consumer banking in 11 markets, including Japan.
Earnings for the US banking giant were $3.4 billion, up 6.6 percent from the year-ago period.
Revenues soared 9.5 percent to $19.6 behind robust gains in global consumer banking as well as in investment banking and corporate lending.
Citi plans to sell its consumer businesses in 11 markets where the company sees little prospect for winning returns. Together, these 11 markets accounted for under five percent of the consumer banking's global revenues.
Chief financial officer John Gerspach said the 11 markets were marginally profitable, but the gain was small.
"We just didn't see a path toward what we would consider to be an acceptable rate of return," Gerspach told a media conference call.
The move affects consumer franchises in Costa Rica, the Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea.
Following the action, Citi's consumer banking business will serve 24 markets with nearly 57 million clients, the company said.
"It's very important for Citi to be a global bank," Gerspach said.
Citi's earnings translated into $1.15 per share, three cents above estimates. Revenues of $19.6 billion were more than the $19.0 billion projected by analysts.
Citi shares rose 2.5 percent to $51.14 in pre-market trade.
Separately, Citi said it has eliminated a personal security service at its Banamex unit in Mexico after an investigation showed some $15 million in fraud, the unauthorized use of security services by outside parties and the use of intercepted telecommunications.
The move follows Citi's disclosure last year of accounting fraud at Banamex that resulted in a $235 million charge.
Citi chief executive Michael Corbat said the bank is working with Mexican officials to bring guilty parties to justice.
"Over the last several months, we have been reviewing our franchise in Mexico and have already made significant changes to strengthen our processes and controls," Corbat said.
"We will continue to take whatever steps are necessary to make sure that every part of our global franchise lives up to our standards."
