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Citigroup posts solid Q3

Citigroup posts solid Q3

(17 October 2012 – USA) The United State’s third largest bank, Citigroup made more money from trading in the third quarter and its lending profitability rose, surprising investors and most economists. A key element of the report was the profitability of the bank's loans, excluding credit losses, which rose as the bank cut its funding costs by taking in more low-cost deposits.

Deposits rose 11 percent to US$945 billion (A$922 billion) at the end of September from a year earlier.

JPMorgan Chase & Co and Wells Fargo & Co both posted shrinking loan profitability last week, raising concerns about how low interest rates could wallop bank profits for some time.

On a conference call with investors, Citigroup’s chief financial officer, John Gerspach, cautioned that the bank's lending margins may contract slightly next quarter.

The global economy is tough for the biggest banks, as demand for many types of loans is sluggish, regulation crimps profits in many investment banking businesses, and low rates weigh on lending profits.

The bank's Citi Holdings unit, which houses businesses and assets the bank sought to shed after the crisis, continues to weigh on the bank. Citi Holdings lost US$3.56 billion in the latest quarter with the brokerage write-down, compared with a loss of US$1.22 billion a year earlier.

Citigroup said profits from commercial and investment banking increased 67 percent in the third quarter on stronger revenue from fixed income and equity markets and lower expenses.
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