Citigroup Inc. said quarterly profit plunged on a $4.7 billion write-down of its stake in a brokerage operated by Morgan Stanley, but the bank's mortgage lending revenue increased and capital markets results rebounded.
The New York-based global bank on Monday said third-quarter net income was $468 million, or 15 cents a share, compared with $3.77 billion, or $1.23 a share, a year earlier.
Adjusted earnings, excluding the previously announced write-down and accounting gains and losses, was $3.27 billion, or $1.06 cents a share, compared with $2.57 billion, or 84 cents a share, a year earlier.
The adjusted results beat analysts' average estimate of 96 cents per share in surveys by Thomson Reuters I/B/E/S.
Citigroup shares were up 1.4 percent in premarket trading. The shares have soared in recent months, rising 27 percent since the end of June and gaining nearly three times as much as the KBW Banks Index.
The bank said profits from the Securities and Banking unit increased 67 percent on stronger revenue from fixed income and equity markets and lower expenses.
The North American Consumer Banking segment saw an 18 percent increase in profits on higher mortgage revenues.
Results outside the United States were generally weaker, with income from International Consumer Banking down 3 percent, and profits in transaction services provided to businesses and governments outside North America down by single-digit percentages.
Chief Executive Vikram Pandit said in a statement that revenue grew faster than expenses in the bank's main businesses. "Our core businesses showed momentum during the quarter as we increased lending and generated higher operating revenues," he said.
In September Citigroup agreed on a price to sell its 49 percent interest in the brokerage to Morgan Stanley. At the time, it said it would take a charge to reduce its carrying value for the asset by about 40 percent.
The joint venture was created in the financial crisis in 2009 as a way for Citigroup to shrink by transferring its Smith Barney brokerage assets to Morgan Stanley.
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