Q3 Earnings: Citigroup Profits Fall, Schwab Enjoys Gains

Monday’s fiscal third-quarter earnings report for Citigroup (NYSE:C) detailed a dramatic drop in net income from last year’s third quarter due to the bank’s write down of its $4.7 billion retail brokerage business. However, the bank’s strong performance in mortgage lending and trading topped analysts’ expectations.

When earnings were adjusted to exclude the huge brokerage unit writedown, they came in at $3.27 billion, or $1.06 per share, which exceeded predictions by nearly 10 cents. Citigroup’s net interest margin actually rose to 2.86 percent from 2.83 percent last year, while margins on lending for competing banks have all generally been shrinking.

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However, when the writedown is considered, Citigroup’s third-quarter net income was $468 million, or 15 cents per share – a far cry from the $3.77 billion, or $1.23 per share, from a year ago.

Citigroup shares continued to do well, though, jumping 3.5 percent following the news. Shares in the bank have risen 27 percent since the end of June.

Charles Schwab Corp. (NYSE:SCHW) also released its third-quarter performance Monday and was happy to report profit gains of 12 percent thanks to a lift from successful asset management.

Net earnings came in at $247 million, or 19 cents per share, compared to $220 million, or 18 cents per share, for the same quarter a year ago. Revenue also rose 1 percent to $1.2 billion.

The company attributes much of its third-quarter success to a 12 percent increase in asset management and administration fee revenues, which grew to $524 million for the quarter.

Chief Executive Walt Bettinger said in a statement that his company is focused on bettering client services and is planning an $85 million acquisition of asset management firm Thomas Partners Inc.

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