Citigroup beats profit estimates in tough climate
The bank slightly misses revenue expectations, however, as it winds down its Citi Holdings arm.
Citigroup (C) shares rose slightly Monday after reporting earnings that beat analyst expectations and improved its credit quality.
The No. 3 U.S. bank reported second-quarter earnings of $1 a share, excluding debt accounting adjustments and other one-time items, down slightly from the same period a year earlier. That beat analyst expectations of 89 cents a share on the same basis, with help from a lower-than-expected tax rate.
"Our core businesses performed well in a difficult environment and are generating solid returns," said CEO Vikram Pandit in a statement. "We had strong growth in both loans and deposits, showed resilience in our markets-facing businesses, and saw record revenues in transaction services."
Including an asset sale and accounting adjustments, the company earned $2.9 billion, or 95 cents a share, down from $3.34 billion, or $1.09 a year earlier.
Revenue fell to $18.64 billion from $20.62 billion a year earlier, coming in just short of analyst expectations of $18.76 billion. The decline in revenue year-over-year was driven by the ongoing wind-down of Citi Holdings, which reduced revenue from Citi Holdings by 62% versus the prior year period. Citicorp revenues were essentially unchanged.
Credit quality improved. Net credit losses declined $736 million, or 25% to $2.2 billion, offsetting a 49% reduction in loan loss reserve releases to $715 million. Consumer loans more 90 days or more past due fell 17% to $3.1 billion.
The company's consumer banking unit boosted its loan loss reserve by $86 million.
As expected, light market volumes caused the company's trading revenue to fall 9% to $3.37 billion.
Total loan loss allowance was 4.3% of total loans, down from 5.4% in the prior year period.
The company ended the period with an estimated Basel III Tier One common capital ratio of 7.9%.
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