Citigroup profits rose beyond expectations

Profits rose 2% to $3.55 billion, or $1.63 per share. Analysts had expected $1.23 per share.

Revenue rose 9% to $20.14 billion. Analysts had expected $19.27 billion.

In markets operations, total trading revenue rose 10% to $4.48 billion. Fixed income trading increased by 14% thanks to client trading volumes for interest rates and currencies. Equity trading revenues fell by 3%.

Revenue from Citigroup’s core business – providing banking services to major companies around the world and helping them move money – rose 13% to $4.72 billion, supported by higher interest rates.

In corporate banking, which includes investment banking fees from mergers, equity and debt sales as well as lending to larger companies, revenue rose 18%.

At its US consumer bank, revenue rose 13% to $4.89 billion as credit card spending and fees rose.

In the wealth management operation, which is seeking growth and is a key component of the planned transformation, revenue rose 2% to $1.9 billion.

The measure of profitability that Citi investors focus on, the return on tangible common stock, fell to 7.7% from 8.2% a year ago. That was better than expected.

Credit card spending volumes were higher than a year ago, but down compared to the second quarter.

Chief Financial Officer Mark Mason told reporters on a conference call that the consumer “remains quite resilient,” though he added that customers with lower credit scores — often associated with lower incomes — are under more pressure.

Expenditures rose 6% to $13.5 billion, which was roughly what was expected. Executives are in the midst of an extensive staff restructuring that will result in headcount reductions in the coming months.

Citi shares rose about 3% early Friday.