Profit increased to US$5.25 billion, or US$2.85 per share, in the three months ended Sep 30.

Citigroup’s third-quarter profit rose 40 per cent compared to a year earlier, helped by stronger investment banking revenue and transactions with multinational companies as well as higher wealth management earnings.

Trading profits gained only 2 per cent over a year ago and fell 27 per cent against the previous quarter, mainly due to a drop in equity trading revenue.

Wall Street banks are navigating a volatile market backdrop as the conflict in Iran pushed oil prices higher, fuelling inflation concerns and prompting the US Federal Reserve to raise interest rates and bond markets worldwide to sell off dramatically.

Shares of the bank fell about 1.4 per cent in premarket trading after the results.

Citi’s investment banking revenue increased 9 per cent from a year ago to US$1.35 billion but fell 13 per cent over the previous quarter as equity and debt underwriting activity slowed.

Profit increased to US$5.25 billion, or US$2.85 per share, in the three months ended Sep 30, the third-largest US lender reported on Tuesday (Oct 13). This compares with US$3.8 billion, or US$1.86 per share, a year earlier. But the bank’s net income was 10 per cent lower in the third quarter compared to the second.

Citigroup posted an 11.5 per cent return on tangible common equity, or ROTCE, in the third quarter and a year-to-date return of 12.6 per cent, ahead of its 11 per cent target.

“We expect to exceed this year’s return target, even as we pull forward investments toward our 11-13 per cent near-term goal — the next waypoints on our path to sustainable returns of 14-15 per cent,” CEO Jane Fraser said in a statement.

Citi’s shares have risen 13 per cent this year, outperforming the broader bank stock index.

The bank said it has returned US$4.1 billion to shareholders including buybacks and dividends in the third quarter, accumulating share repurchases of US$13.3 billion this year.

Bank stocks have come under pressure in recent weeks as a sharp rise in bond yields raised concerns that higher borrowing and funding costs could weigh on loan growth and dealmaking.