Citigroup, one of the largest banks in the world, reported its third straight quarter of profit yesterday in another sign that the American consumer is healing.
The New York bank, which is still 12pc owned by the government, earned $2.15bn (€1.5bn), or 7 cents per share, in the three months ending in September. The results were better than analysts were expecting, and compared to a loss of $3.24bn, or 27 cents per share, during the same period last year. Citi's stock rose nearly 4pc, lifting shares of other banks along with it.
Almost all of the profit came from dipping into funds that Citi had previously set aside to cover bad loans. That reflects the bank's increasing level of confidence that its customers will be able to make payments on loans in the future.
In an encouraging sign, losses from bad loans fell 30pc during the quarter to $7.66bn as defaults in Citi's retail partner cards, Citi-branded credit cards and real estate portfolios all fell. It was the fifth consecutive quarter of declining losses from soured loans.
So far, Citi has steered clear of the foreclosure mess that has ensnared other major US banks.