Citigroup beats profit estimates in tough climate

The bank slightly misses revenue expectations, however, as it winds down its Citi Holdings arm.

By Benzinga Jul 16, 2012 5:40PM
By Michael Matthews

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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1Comment
Jul 16, 2012 10:53PM
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Obviously the rest of the USA has not been to a Piggly Wiggly grocer.
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