Citigroup returns to profit

After being criticised for nearly two years by critics and demonised by the US banking regulator, there was a wide smile on Citigroup CEO Vikram Pandit's face as  as the bank showed profits for the first time in nearly two years.

The once biggest bank in the US, which had been in the red since the onset of the global financial crisis and the recipient of a controversial bailout by the US government, yesterday posted a $4.4-billion profit in the first quarter.

The first quarter profit followed a massive net loss of $7.6 billion in the last quarter of 2009 (See: Citigroup reports fourth quarter net loss of $7.6 billion).

As the global financial crisis started striking the big Wall Street banks, Pandit was looking at a deep hole in Citi since its losses were so huge that the US government gave it two round of funding in exchange for a 27-per cent stake.

To trim its losses and repay the government, Citigroup sold most of its non core assets in Asia and the Asia-Pacific region. It completed 14 divestitures in Citi Holdings in 2009, including Smith Barney, Nikko Cordial Securities and Nikko Asset Management.

Now, the third-largest US bank has reported net income of 15 cents a share, as against an 18 cents a share loss or $966 million in the first quarter of 2009.

According to analysts, Citigroup, long seen as the weakest of the major US banks, seems to be staging a strong recovery. In March, Pandit had said the bank would return to sustained profitability and that is losses from bad assets would be manageable if the economy held course.