Citi pulls consumer banks from 11 markets, profit tops estimates

Citigroup Inc (C.N) said it would pull out of consumer banking in 11 markets, including Japan and Egypt, as the most international U.S. bank focuses on more profitable businesses.

Citigroup, which reported a better-than-expected 13 percent rise in adjusted third-quarter net profit, is returning to an earlier structure of concentrating its extensive global reach on business clients by pruning its consumer businesses worldwide.

Citigroup's shares rose 3.3 percent to $51.52 in early trading on Tuesday.

The latest exits will bring down to 24 the number of countries where Citigroup has consumer banks.

"I am committed to simplifying our company and allocating our finite resources to where we can generate the best returns for our shareholders," Chief Executive Michael Corbat said.

While a presence in many countries gives Citigroup valuable name recognition, it means its operations are subject to myriad local laws and customs that tend to most affect consumer banking operations.

A federal criminal investigation into Citigroup's Mexican unit, Banamex, underscores how difficult it can be to operate in more than 100 countries and to divide responsibilities between its headquarters in New York and local banking centers.

Citigroup said on Tuesday a Banamex legacy unit, which provided personal security services, was being disbanded after the bank uncovered illegal conduct including fraud of $15 million.

The third-largest U.S. bank said it would exit consumer operations in six Latin American countries, as well as Japan, Egypt, the Czech Republic, Hungary and Guam. Citigroup said it would continue to serve institutional clients in these markets.

Cumulative revenue from these markets was $1.6 billion in the last 12 months, while net income was only $34 million with a 0.11 percent return on assets.

Tuesday's announcement included an acknowledgement that there is an initial cost to close down businesses.

Citigroup said its unusual expenses in the third quarter included $59 million related to the sale of consumer businesses in Greece and Spain.

Citi agreed in June to sell its retail banking and credit card business in Spain to Banco Popular (POP.MC).

Adjusted net profit for the quarter rose to $3.67 billion, or $1.15 per share, from $3.26 billion, or $1.02 per share, a year earlier, helped by better results from its portfolio of troubled assets left over from the financial crisis.

Analysts had expected earnings of $1.12 per share, according to Thomson Reuters I/B/E/S.

Adjusted revenue increased 10 percent from a year earlier to $20 billion as fixed income trading business improved.

Citi Holdings, the division that holds the bank's portfolio of troubled assets, reported adjusted net income of $272 million compared with a loss of $113 million a year earlier.

Wells Fargo & Co (WFC.N), the fourth-largest U.S. bank, reported a 1.7 percent rise in third-quarter profit as its mortgage business became less of a drag.

JPMorgan Chase & Co (JPM.N) reported a third-quarter profit as the biggest U.S. bank boosted revenue from trading and investment banking.