Associated Press | Citigroup Inc. provided more evidence that
the nation’s big banks may have turned a corner. The bank reported a
surprise first-quarter profit Monday as trading revenue offset losses
from failed loans.
Citigroup said it earned $4.4 billion after payment of preferred
dividends, compared with a loss of $696 million a year earlier. That
was the bank’s biggest quarterly profit since the second quarter of
2007.
The company cited strong trading of bonds, stocks and other securities for its big profit. Citigroup, one of the hardest hit banks during the credit crisis and recession, said loan losses fell for the third consecutive quarter. The amount of money it set aside for loan losses also fell.
Citigroup earned 15 cents per share on revenue of $25.4 billion. That easily beat analysts expectations of a slight loss, according to Thomson Reuters.
Citigroup’s strong showing follows similarly impressive results last week by Bank of America Corp. and JPMorgan Chase & Co. That has boosted hopes that the worst of the credit crisis has passed and banks may be entering a period of sustained profitiability.
Yet CEO Vikram Pandit sought to dampen short-term expectations for Citigroup, saying the bank remained cautious “given the uncertain economic recovery and high unemployment in the U.S.”
“Realistically, we do not expect our performance to follow an invariable trend-line upward,” he said. “Longer-term, however, the prospects for Citigroup are clear and bright.”
Pandit sounded a little less upbeat about the economy than his counterparts at JPMorgan Chase and Bank of America. But Citigroup’s recovery from the devastation of the financial markets has been more difficult.
The bank’s stock rose about 1 percent in pre-opening trading. Other financial stocks extended a pullback in response to news that the government was charging Goldman Sachs Group Inc. with civil fraud for mortgage-related transactions.
Citigroup said its total reserves to cover losses from bad loans fell 22 percent, or $2.4 billion, from the fourth quarter to its lowest level in two years. The company said its credit losses fell 15 percent to $8.4 billion from almost $10 billion in the fourth quarter. Citigroup reported improvement across nearly all its loan portfolios.
The company reported $8 billion in securities and banking operations, which includes its trading business. That was up $4.7 billion from the fourth quarter.
Bonds accounted for a big chunk of the trading gain. Like other companies’ investment banking operations, Citigroup’s benefited from very low interest rates that allowed it to borrow cheaply to buy higher-yielding investments.
Citigroup’s stock has been rising lately following the government’s announcement last month that it would start selling the 27 percent stake in the bank it acquired as part of its bailout of the bank during the credit crisis.
The sale by the government will end the last remaining ties Citigroup has to the Troubled Asset Relief Program. Citigroup received a total of $45 billion from the government during the credit crisis. It repaid $20 billion in December and the remaining $25 billion was converted into the minority stake the government is now selling.
“All of us at Citigroup recognize that we would not be where we are without the assistance of American taxpayers,” Citigroup Pandit said.
Not bad considering Obama has taken over the banks with his socialistic agenda.
Great to see that they are giving credit to the american tax payer for helping them get healthy again. It would be even better if they can tell us when they plan on providing credit again so that, in turn, they can help the american tax payer recover and get healthy again. Right now, the banks hold the key to the recovery!
My father passed away last August. Among his few bills that were on his desk, 3 were from credit card/charge card companies including one from Citi. The other 2 waived the late fees when we sent payment 2 days late- they understood it was difficult for him to write a check when he has dead, and frankly, I had other things on my mind than to pay a credit card bill on time. Citi was the only one to show their true greedy colors. They refused to waive the late fee, and then put my Dad’s account into collections. It cost more for that overnight letter than it would be to waive the $25 fee. I paid the balance right away to get them off our backs. Then Citi had the audacity to call me back asking if I wanted to continue the account in my name? They said he had a good credit score and would be a shame to waste it. ARE YOU FRICKING KIDDING ME? DO NOT USE CITI AT ALL EVER! THEY ARE MONEY GRIBBING THEIVES! They are not too big to fail. They should go away.