Citigroup posts 26% rise in adjusted quarterly profit
16 Jul 2013
Buoued by better trading revenue and improving home prices that helped it reduce its mortgage losses, Citigroup reported better-than-expected 26 per cent rise in adjusted quarterly profit.
The second quarter saw adjusted net income increase to $3.89 billion, or $1.25 per share, from $3.08 billion, or $1.00 per share, a year earlier, according to the third-largest US bank by assets.
The announcement of the lender's earnings pushed up the company's shares in pre-market trading.
Revenue from fixed income markets was up 18 per cent to $3.37 billion, even as equity market revenue increased 68 per cent to $942 million.
Trading revenue in the year-earlier quarter was weak across the industry due to a coincident slowdown in the business with revelation of billions dollars in losses by JPMorgan Chase on derivatives.
Citigroup's net credit losses fell to $2.61 billion from $3.49 billion with higher house prices increasing the value of the home mortgage assets held by the company since the financial crisis.
Earnings were also up due to the company's drawdown of $784 million of reserves that it had taken earlier against loan losses that failed to materialise. The draw down comes after a reserve release of $1.01 billion in the year-earlier quarter.
Citibank has let go thousands of workers in a cost cutting exercise, after chief executive officer Michael Corbat, 53, took over from Vikaram Pandit, 56, in October, Reuters reported separately.
Additionally operations have also been scaled back in some countries. Citi Holdings, the parking unit for the company's unwanted assets, set up after the financial crisis, reported its smallest loss ever.
JPMorgan Chase & Co, the biggest US bank, posted a profit on 12 July of $6.5 billion, or $1.60 a share, while Wells Fargo & Co, the fourth-biggest, reported profit of $5.52 billion, or 98 cents a share.
Citigroup continued to liquidate and sell unwanted investments in the Citi Holdings unit, which contained a consumer-finance business along with billions of dollars of US mortgages. Assets in the division were down 31 per cent to $131 billion, while losses fell to $570 million from $910 million a year earlier.
According to Citigroup, revenue from trading fixed-income products was up 18 per cent to $3.37 billion, excluding accounting adjustments, driven by growth in ''all major products.
