Citigroup says its September quarter result would have been much better but for the pre-tax loss taken on quitting its Australian consumer business to the National Australia Bank.
The bank reported third quarter earnings per share of $US2.15, up from $US1.36 a year earlier, reflecting the growth in net income, a 3% decline in the number of shares on issue and the low comparative base for the September, 2020 quarter.
That was a 48% jump in net income to $US4.6 billion, from $US3.1 billion a year earlier. Earnings were boosted by the decision to write back $US1.16 billion from its loan loss reserves. A year earlier it had had added $US 436 million to the reserves to survive a potential impact from the pandemic
In August NAB has announced that was buying Citigroup’s Australian consumer business with $12.2 billion in assets and deposits of about $9 billion, and about 800 Citi staff who would join NAB.
NAB said it would pay Citi cash for the net assets of Citi’s consumer business, plus a premium of $250 million. CEO Ross Mr McEwan said NAB was paying $1.2 billion, which was eight times the Citi unit’s earnings.
The deal still has to get regulatory approvals, especially from the ACCC which had previously expressed concerns about a lessening of competition if a big four bank bought Citi’s retail operations. The deal is expected to close by march next year, subject to the approvals, especially from the ACCC.
Citi is keeping its investment bank and institutional businesses in Australia which has around 1,500 corporate clients.
In its third quarter results and briefing on Thursday, Cit said that excluding the sale of the Australia business, earnings would have been $US2.44 per share.
In other words the loss on the sale of the Australian consumer business was 29 US cents per share.
Citi said revenue for the September quarter was $US17.15 billion, down from $US17.3 billion last year. That reflected the absence of the Australian business from the comparison.
But it was better than Wall Street forecasts of $US16.93 billion.
Citi’s investment banking and equity markets segments both saw gains of 40% year on year, with double-digit fee growth recorded in treasury and trade solutions.
Citi said it has returned close to $US11 billion to shareholders so far in 2021 through a healthy dividend and share buybacks.
“I’m very proud to tell you that it was Citi’s best M&A quarter and the second-best investment banking quarter in a decade and lending in the [Institutional Clients Group] grew again this quarter, albeit modestly,” Citi CEO Jane Fraser said on an investor call.
Ms Fraser indicated the bank would soon be leaving 12 other markets in Asia and elsewhere after the Australian sale. Details of those sales will be revealed in the near future. Australia, it seems was the easiest to sell first up.
