Citigroup's profits up 26pc amid cost-cutting programme
CITIGROUP reported a stronger-than-expected 26pc rise in adjusted quarterly profit as stronger home prices reduced losses on mortgages and bond trading revenue jumped.
The biggest boosts in profit came from its securities and banking unit, where bond trading revenue rose 18pc, while stock trading revenue soared 68pc, and underwriting and advisory was up 21pc.
Citi employs more than 2,000 people in Ireland and is the biggest employer in the IFSC. At the Citi Holdings unit, which houses businesses and assets the bank is looking to shed, the bank set aside less money to cover bad mortgages as the US housing market showed signs of recovery.
Citigroup shares rose 2.6pc in early trading on the back of the results. The results underscored how the bank is returning to normal after getting walloped during the financial crisis and needing three government rescues.
"Citi is a restructuring story and it is an emerging markets story," analyst Fred Cannon of Keefe, Bruyette & Woods said before the company reported results.
Adjusted net income at the third-largest US bank by assets rose to $3.89bn, or $1.25 per share, in the second quarter, from $3.08bn, or $1 per share, a year earlier.
Adjusted results excluded the positive impact of changes in the value of the company's debt.
Revenue from fixed income markets, part of the securities and banking unit, rose to $3.37bn from $2.86bn, while equity market revenue soared to $942m from $561m.
Trading revenue in the year-earlier quarter was weak across the industry as the European debt crisis brewed.
Citigroup's net credit losses declined to $2.61bn from $3.49bn as higher house prices lifted the value of the home mortgage assets held since the financial crisis.
In Citi Holdings, it set aside $451m for bad loans, benefits and claims, down from $1.23bn in the same quarter last year.
Chief Executive Mike Corbat has sought to cut costs and increase earnings since October, when Citigroup's board put him in the job after ousting Vikram Pandit.
But Mr Corbat and chairman Michael O'Neill have said they are sticking with Mr Pandit's strategy of positioning the company to benefit from global growth in emerging markets, urbanisation and increasing digital commerce.
Citigroup is the most global of the big US banks. About 58pc of its revenue last year came from outside of North America. (Reuters)
Irish Independent Supplement