Citigroup (C.US) reported third-quarter results that topped market expectations, supported by higher investment banking revenue, increased deal activity with multinational corporations, and profitable growth in its wealth management business.

According to the financial report, Citi's Q3 revenue rose 7.7% year-over-year to $23.845 billion, beating the market consensus by $80 million. Net profit came in at $5.245 billion, up 40% year-over-year. GAAP earnings per share stood at $2.85, exceeding the market consensus by $0.20.

The preliminary Common Equity Tier 1 (CET1) capital adequacy ratio at quarter-end was 12.8%, unchanged from the end of the previous quarter. This was mainly driven by net income and reduced deductions for deferred tax assets and other items, but was offset by common stock buybacks, common and preferred stock dividend payments, and unrealized losses on available-for-sale securities. The Return on Tangible Common Equity (ROTCE) was 11.5% for the quarter and 12.6% year-to-date, both above the bank's 11% full-year target, placing it in a comfortable position among large banks.

The business structure showed a clear "non-trading-driven" characteristic. The services business (cash management, trade and securities services for institutional clients) posted net revenue of $6.614 billion, up 15% year-over-year, with profit rising 27% year-over-year, making it the strongest profit growth engine this quarter. The wealth management business generated net revenue of $3.269 billion, up 15% year-over-year, with client assets also growing 15%. The markets business reported net revenue of $6.113 billion, up 6% year-over-year. Within that, equity trading revenue rose 14% year-over-year, while fixed income trading revenue increased 4% year-over-year, though both declined on a quarter-over-quarter basis, reflecting a cooling in capital markets activity in the third quarter. The banking business posted net revenue of $1.741 billion, up 6% year-over-year. Investment banking fees were $1.35 billion, up 9% year-over-year but down 13% quarter-over-quarter.

The credit card business saw profit decline 8% year-over-year in the third quarter. Although customer spending increased 13% and loan volumes rose 9% as the U.S. economy continued to expand at a steady pace, supported by resilient consumer spending and corporate investment, credit card business profit fell due to higher reward costs, payments to partners, and increased credit provisions.

Costs created a magnifying effect on the bottom line. Third-quarter operating expenses were $13.952 billion, down 2% year-over-year, a key factor behind net profit significantly outpacing revenue growth (+40% vs +8%). Credit loss provisions were $2.586 billion, up 6% year-over-year. Within that, U.S. credit card provisions were $1.9 billion, up 4% year-over-year.

Capital returns remained at a high intensity. This quarter, Citi returned a total of $4.1 billion to common shareholders (including stock buybacks and cash dividends), with cumulative stock buybacks reaching $13.3 billion year-to-date. In August, the board raised the quarterly dividend to $0.67 per share.