Citi's mortgage earnings decline despite origination surge

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Despite a significant rise in first-mortgage production due to lower interest rates, profits from home lending in Citigroup's retail banking division fell slightly in the second quarter.

Citigroup's residential first-mortgage originations rose roughly 50% from a year ago to a high not seen since 2016.

The bank's first-lien home lending totaled $3.9 billion during the quarter, marking a 95% increase from the previous three-month period.

But first-mortgage profits were somewhat lower on a year-over-year and consecutive-quarter basis.

The net gain on the sale of first-lien residential mortgages during the period was $31.3 billion during the quarter, an amount down nearly 2% from 2Q18 and 7% from 1Q19.

Total revenue generated by mortgages in Citi's retail consumer banking division was down 9% year-over-year and 2% on a consecutive-quarter basis at $127 million.

With mortgages excluded, Citi's North American retail consumer-banking division's earnings rose 1% on the year, and 3% compared to the first quarter at more than $1.2 billion.

Overall, Citi recorded $4.8 billion in net income, or $1.95 earnings per share, up from $4.5 billion and $1.63 during the second quarter of 2018, and from $4.7 billion and $1.87 for the first quarter of 2019.

When adjusted for a one-time gain linked to TradeWeb's initial public offering, the company's EPS for the second quarter of 2019 was $1.83 per share. The gain was linked to Citi's equity stake in the trading platform.

Citi's earnings slightly outperformed Zacks' consensus estimates, but reports on Seeking Alpha suggest its numbers were near or slightly below other some analysts' forecasts.

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Earnings Stocks Originations Revenue and expenses Mortgage rates Citigroup