One-off gains help US banks
(22 July 2009 – USA) One off gains for two US banking giants have helped them into a second quarter profit, but both are still busy repairing their books and writing off bad loans.
Both Citigroup and Bank of America have reported better than expected quarterly profits, just as their investment banking counterparts Goldman Sachs and JPMorgan have done.
The two traditional banks, however, warned that losses in their core business of consumer loans were likely to continue.
Citigroup made US$4.28 billion (A$5.26 billion) in the second quarter of 2009 after a loss of US$2.5bn a year earlier, bolstered primarily by a one-off gain.
Total revenues were US$30.0 billion, up US$12.4 billion from the second quarter of 2008, due to the one-off gain of US$11.1bn from the sale of its Smith Barney brokerage.
Acknowledging the core banking problems, Citigroup chief executive Vikram Pandit said that the bank’s most significant challenge now remains consumer credit.
Meanwhile, Bank of America reported second quarter 2009 net income of US$3.2 billion, compared with $3.4 billion for the same time last year.
Bank of America net revenue rose 60 percent to US$33.1 billion compared with US$20.7 billion a year ago.
As with Citi, BoA income increased due to a sale; a $3.8 billion gain from the completed sale of its merchant processing business to a joint venture.
Income gains for BoA can also be put down to the addition of Merrill Lynch and Countrywide, as well as a US$5.3 billion gain on the sale of China Construction Bank shares during the period.
BoA chief executive, Kenneth Lewis, expressed similar thoughts to Citi’s chief. Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality, Lewis said.
The two traditional banks, however, warned that losses in their core business of consumer loans were likely to continue.
Citigroup made US$4.28 billion (A$5.26 billion) in the second quarter of 2009 after a loss of US$2.5bn a year earlier, bolstered primarily by a one-off gain.
Total revenues were US$30.0 billion, up US$12.4 billion from the second quarter of 2008, due to the one-off gain of US$11.1bn from the sale of its Smith Barney brokerage.
Acknowledging the core banking problems, Citigroup chief executive Vikram Pandit said that the bank’s most significant challenge now remains consumer credit.
Meanwhile, Bank of America reported second quarter 2009 net income of US$3.2 billion, compared with $3.4 billion for the same time last year.
Bank of America net revenue rose 60 percent to US$33.1 billion compared with US$20.7 billion a year ago.
As with Citi, BoA income increased due to a sale; a $3.8 billion gain from the completed sale of its merchant processing business to a joint venture.
Income gains for BoA can also be put down to the addition of Merrill Lynch and Countrywide, as well as a US$5.3 billion gain on the sale of China Construction Bank shares during the period.
BoA chief executive, Kenneth Lewis, expressed similar thoughts to Citi’s chief. Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality, Lewis said.
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