Citigroup (NYSE:C), the third U.S. bank by assets, had a net profit of $3.2 billion in the third quarter, compared to 468 million dollars in the same period of last year, which is still below analysts’ estimates. The profit for the financial group was affected in the third quarter, by the decline in operating income and a decrease in bond transactions in the mortgage business.
The financial results in the same period of last year last year were affected by a non-recurring loss of $2.9 billion in the Morgan Stanley Smith Barney brokerage joint venture.
Chief executive officer of Citigroup, Michael Corbat, implemented some measures such as reducing the number of employees, closing branches and withdrawal from certain markets, seeking thereby to adapt bank’s operations to the lower revenues from bond transactions and reducing its mortgage refinance business.
After he took over as CEO in October 2012, Corbat launched a comprehensive restructuring aimed at laying off 11,000 employees and scaling back in some countries.
Michael Corbat, who previously led a division responsible for selling bank’s unwanted assets, wants to reduce spending this year by $900 million.
The average 30-year mortgage interest rate on U.S. rose in late September to 4.32 percent, compared to a historical low of 3.5 percent reached in the first part of this year, before reducing the quantitative easing program was perceived as an imminent threat.
Divisions of bond trading and mortgage lending were hit this summer by fears that the Federal Reserve could reduce the program of quantitative easing. The central bank injected $85 billion per month in the economy.
Bank revenues rose 30% in the period to $17.9 billion. Citigroup’s assets were in late September at $1,778 billion, up slightly compared to the same period last year. Group shares rose 25 percent this year. At the end of trading session on Tuesday, Citigroup had a market capitalization of $148.6 billion.
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