Citigroup emerged as the big winner among US banks Monday with its shares increasing 5.5 percent to close at $36.66. All indexes increased 1 percent after the US Department of Commerce announced that retail sales in September went up 1.1 percent from August and 5.4 percent from the previous year.
The furniture and home furnishing stores is the smallest type of business among the broad categories included in the Commerce Department report but it got the largest year-over-year improvement for sales during the first nine months of 2012. Its retail sales increased 8.8 percent to $70 billion. This is one of the signs of the recovery of the housing sector.
The KBW Bank Index increased 1 percent to close at 50.50. It showed 16 of the 24 index components showing gains for the day. Citigroup announced its third quarter earnings of $468 million or 15 cents per share. It was a drop from 95 cents during the second quarter and $1.23 during the third quarter of 2011.
It was a bad quarter for the Citigroup. It got a $4.7 billion pre-tax loss from its sale of 14 percent stake in the Morgan Stanley Smith Barney joint venture as well as a write-down of its stake in the joint venture. It also got a negative $776 million in debit valuation adjustments and a $582 million tax benefit.
When the items mentioned above were excluded, Citigroup earned $3.3 billion or $1.06 per share during the third quarter. It was above the estimate of 96 cents a share made by analysts surveyed by Thomson Reuters.
Citigroup’s margin expansion continued to grow in time when most of the large banks in the United States see margin pressure as the Federal Reserve try to keep federal funds rate from zero to 0.25 percent since the end of 2008. In the effort to keep long term rates at their historic low levels, the Fed launched another round of quantitative easing last September.