Citigroup stuns analysts with $4.43bn quarter profit
CITIGROUP, the US financial services company, which employs close to 1,900 people in Ireland, surprised analysts by posting a $4.43bn (€3.28bn) first-quarter profit as it set aside less for bad debts. Analysts had expected the company to break even.
The third-largest US bank bounced back from a $96m loss in the same quarter last year.
Citigroup, long seen as the weakest of the major US banks, seems to be recovering along with other rivals as lower competition drives up profit among the banks that survived the recession.
Chief executive Vikram Pandit, who is taking a $1 annual salary until the company turns consistently profitable, said in February that 2010 may show the "earnings potential of the new Citi" after two straight annual losses totalling $29bn.
Total bad-loan costs fell to $8.37bn from $9.92bn in the first three months of 2009.
The bank, which employs 1,800 people in Dublin and 80 in Waterford, expects to lose less from bad loans while boosting profit from consumer banking.
"They are now feeling themselves to be sufficiently reserved and they are beginning to reduce credit expenses," said Gary Townsend, president of Hill-Townsend Capital. "That falls directly to the bottom line."
Sales from continuing operations shrank 5.8pc to $25.4bn, while consumer-banking revenue rose 3.1pc to $8.08bn.
Revenue in Citigroup's global transaction services division, which manages bank accounts for corporations and acts as securities custodian for fund managers, was $2.44bn, up from $2.37bn.
Mr Pandit cautioned, however, that Citigroup's road to recovery could remain rocky.
"Realistically, we do not expect our performance to follow an invariable trend-line upward," he said, but added that the bank's long-term prospects were "bright".
Through Friday's close, the shares had risen 38pc this year, surpassing the 28pc rise in the KBW Banks Index BKX. As the credit outlook has improved, the shares of the banks seen as riskiest have rallied more than their peers because these lenders have more to gain from a stabilising economy.
Citigroup's results, like those of other banks, were influenced by accounting rules that moved loans bundled into bonds back onto bank balance sheets.