Citigroup’s Net Income Jumps 35% on Unit Sale

Citigroup Inc. reported a 35% rise in third-quarter profit on the sale of an insurance unit, and said higher investment banking revenue offset weakness in consumer banking and the effect of Hurricane Katrina.

Net income for the world’s largest bank rose to $7.14 billion, or $1.38 a share, from $5.31 billion, or $1.02, a year earlier. The latest results included a $2.12-billion gain from the sale of Travelers Life & Annuity to MetLife Inc. and $222 million of costs from Katrina.

Income from continuing operations, which excludes the 41 cent a share gain from the Travelers sale, was $4.99 billion, or 97 cents a share, below the average analysts’ estimate of 98 cents. If Katrina’s 4-cent-a-share effect also were excluded, profit would have been $1.01 a share.

New York-based Citigroup shares fell 23 cents to $44.81. The stock is down 7% year to date.

Revenue rose 15% to $21.5 billion, topping forecasts for $21.2 billion. Expenses rose 12% to $11.4 billion. Return on invested capital was 25%.

A 35% increase in corporate and investment banking revenue, to $6.43 billion, helped offset slowing growth in consumer banking. The failure of long-term interest rates to follow short-term rates higher for much of this year crimped lending margins, and a jump in bankruptcy filings increased credit costs.