NEW YORK — Citigroup's strategy of slimming down and focusing on a few core businesses is paying off.
The New York bank reported third quarter earnings rose 74 percent in the third quarter, to $3.8 billion, due to lower losses from loans and an accounting gain. Its international consumer lending business grew in Asia and Latin America. The bank also decided to keep its credit card partnership with retailers as that business improved.
The improvement in Citi's earnings come as the buildings of financial institutions are being stormed by protesters of the Occupy Wall Street movement. Two dozen people were arrested after they entered a Citibank branch in New York on Saturday and refused to leave.
Last week Vikram Pandit, CEO of Citigroup, said he understands the sentiments of the protesters and was willing to meet with them. Citi spokesman Edward Skyler said no one had reached out from the organizers to talk with Pandit yet.
Citi's earnings were better than Wall Street analysts expected. Citi's stock rose 1.4 percent to $28.80 as of 11:15 a.m., even as other banks stocks fell as part of a broad decline on the stock market. Citi is the nation's third-biggest bank measured by assets.
Citi's losses from bad loans fell 41 percent during the quarter to $4.5 billion as defaults fell from its credit card loans for Citi-branded cards. That allowed Citi to add $1.4 billion to its earnings from credit reserves it set aside for deeper losses.
Citi's income also included a $1.9 billion accounting gain related to its credit holdings. The paper gains are related to a drop in the value of banks' liabilities, which have to be recorded as an earnings gain according to accounting rules.
The New York bank earned $1.23 per share and its revenue edged up 1 percent to $20.86 billion.
Excluding the gain, the earnings were equivalent to 84 cents per share. Analysts surveyed by FactSet predicted Citigroup would earn 82 cents per share. Excluding the accounting gain, Citi's revenue fell 8 percent from the same period last year.
The bank's international consumer business increased 10 percent due to growth in Asia and Latin America.
Its North American consumer business fell 9 percent from a year ago due mainly to lower average balances on its credit cards. Revenue in the card business also fell due to regulations that limit the ways banks can increase interest rates and fees.1 comment on this story
Citi said it now plans to hold on to its private-label credit card unit, which issues cards in partnership with retail stores. Earlier Citi had said it was planning to either sell or pare down the unit. Pandit said in an internal memo to employees the business earned $2.2 billion so far this year as delinquencies declined.
Citi said its stock and bond trading business was hurt by uncertainty in financial markets due to the debt crisis in Europe and a downgrade of the U.S. government's credit rating in August.
Fixed income revenues fell 33 percent to $2.3 billion, and equity revenue fell 73 percent to $289 million. Investment banking revenue fell 21 percent as fewer companies issued stocks and bonds or made acquisitions.