On Friday, Citigroup Inc reported a 25 per cent drop in third-quarter profit as its investment banking business struggled to cope with a decline in dealmaking.

M&A activity has fallen this year as corporates try to calibrate their businesses to a higher interest-rate regime across most parts of the world while dealing with geopolitical uncertainties such as the fallout from the Ukraine war.

The weaker economic picture prompted Citi to add USD 370 million to reserves this quarter. That compares with a release of USD 1.16 billion from its reserve a year earlier.

The increase in reserves pushed Citi’s overall credit costs to USD 1.36 billion, compared with a benefit of USD 192 million a year earlier. Net profit was USD 3.5 billion, or USD 1.63 per share, in the three months ended September 30, compared with USD 4.6 billion, or USD 2.15 per share, a year earlier.

Analysts had expected a profit of USD 1.42 per share. It was not immediately clear if the reported numbers were comparable to estimates.