Citigroup (NYSE:C) shares were bouncing higher on Tuesday after the bank beat third quarter profit targets, supported by stronger-than-expected trading results, while also announcing plans to retreat from 11 foreign retail-banking markets.
Shares added 2.2 percent to US$51.02 in New York as of 11:29am ET. Year-to-date, the stock has declined 1.9 percent.
The bank reported its third quarter profit rose 6.6 percent from a year earlier, with net income of $3.44 billion, or $1.07 per share, compared with $3.23 billion, or $1.00 per share, in the same period last year.
Excluding accounting adjustments, profit was $1.15 per share, topping the $1.12 per share analysts polled by Thomson Reuters had anticipated.
Revenue jumped to $19.6 billion from $17.9 billion, also topping the $19.05 billion of revenue expected by analysts.
Citigroup also said it plans to accelerate the transformation of its global consumer banking business by focusing on markets where it has the greatest scale and growth potential. As a result, it is planning to exit 11 markets, including consumer franchises in Costa Rica, Czech Republic, Egypt, El Salvador, Guam, Guatemala, Hungary, Japan, Nicaragua, Panama and Peru, as well as the consumer finance business in Korea.
Active sales processes are underway for the majority of these businesses, Citigroup said, which subject to market conditions, are expected to be sold mostly by the end of next year.
Once this happens, Citigroup will have a retail bank business in 24 countries, down from the current 35, and will serve nearly 57 million clients.
The New York-based bank has been scaling back since the financial downturn to streamline its operations, with the company already exiting retail operations in countries like Honduras, Turkey, Romania, Greece and Spain.
"I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders," said chief executive officer, Michael Corbat.
"While we have made progress optimizing these 11 consumer markets, we believe our Global Consumer Bank will achieve stronger performance by focusing on the countries where our scale and network provide a competitive advantage."
Separately, the bank said Tuesday it found $15 million in fraud as a result of an investigation into the security arm of its retail business in Mexico, which earlier this year revealed it was part of an accounting fraud involving oil services giant Oceanografia. Citgroup is cooperating with law enforcement and regulators in both the US and Mexico on this issue, it added.
Citigroup's third quarter results, while helped by higher revenues and lower credit costs, were hampered somewhat by higher operating expenses, driven by higher legal and incentive compensation expense as well as increased regulatory and compliance costs.
Third quarter operating expenses increased 5.8 percent from a year ago to $12.36 billion, as legal expenses jumped 40 percent to $951 million, while costs tied to its cost-cutting efforts more than doubled to $382 million.
Trading revenue in the quarter jumped 6.7 percent. Fixed income trading revenue at Citigroup rose 5 percent to $2.98 billion, while equities trading revenue rose 14 percent to $763 million.
Global consumer banking revenues rose 4 percentto $9.6 billion, driven by growth in North America, Latin America and Asia, Citigroup said.