Citigroup records better quarter than expected
(19 October 2011 – Australia) Citigroup warned that some markets could face weak growth for years as it posted higher quarterly earnings on Tuesday.
Citigroup, the third-largest US bank by assets, reported net income of US$3.77 billion, (A$3.69 billion) up from US$2.17 billion a year earlier.
The latest results included a pretax gain of US$1.9 billion, due to the bank's widening credit spreads during the quarter. When a bank's debt weakens relative to US Treasuries, it can record an accounting gain because it could theoretically profit from buying back debt.
Excluding that gain, Citi earned US$2.6 billion, or 84 cents per share.
The results were better than expected, but the bank's shares shrugged off early strength and ended the day lower amid broader concerns about the industry's future profitability. Wells Fargo posted a steep drop in lending margins on Tuesday.
Like its rivals, Citigroup was hit by the European debt crisis and the sluggish US economy. Investment banking fees dropped and its loan book fell 2 percent. Operating expenses rose, in part because of investments made to boost its business.
Chief Executive Vikram Pandit is trying to turn the bank around after the financial crisis by focusing on emerging markets, where economies are still growing relatively quickly. The weak US economy also weighed on results at JPMorgan Chase & Co last week.
'In the developed markets, growth is likely to be slow for years,' Pandit said in a conference call with analysts.
He also said the US housing market remains the 'greatest risk' that domestic banks face.
The latest results included a pretax gain of US$1.9 billion, due to the bank's widening credit spreads during the quarter. When a bank's debt weakens relative to US Treasuries, it can record an accounting gain because it could theoretically profit from buying back debt.
Excluding that gain, Citi earned US$2.6 billion, or 84 cents per share.
The results were better than expected, but the bank's shares shrugged off early strength and ended the day lower amid broader concerns about the industry's future profitability. Wells Fargo posted a steep drop in lending margins on Tuesday.
Like its rivals, Citigroup was hit by the European debt crisis and the sluggish US economy. Investment banking fees dropped and its loan book fell 2 percent. Operating expenses rose, in part because of investments made to boost its business.
Chief Executive Vikram Pandit is trying to turn the bank around after the financial crisis by focusing on emerging markets, where economies are still growing relatively quickly. The weak US economy also weighed on results at JPMorgan Chase & Co last week.
'In the developed markets, growth is likely to be slow for years,' Pandit said in a conference call with analysts.
He also said the US housing market remains the 'greatest risk' that domestic banks face.
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