Citigroup’s $4.4B Profit is Best in 2 Years; Credit Losses Decline

Citigroup Chief Executive Vikram PanditCitigroup, the last major banking institution to repay its government bailout last year, reported a profit of $4.4 billion, or 15 cents per share, for the first quarter of 2010, soundly beating expectations with its highest net income since early 2007.
The third largest U.S. bank, Citigroup’s net credit losses declined $1.6 billion, or 16 percent, from the previous quarter to $8.4 billion.
Its mortgage and credit card businesses are still struggling with a reported loss of $885 million, or 10 percent, to $8 billion – but net credit losses declined for the third consecutive quarter.
Provisions against future credit losses declined $2.4 billion, or 22 percent, from the previous quarter to its lowest level since the first quarter of 2008.
A year ago, Citigroup reported a shareholder loss of 18 cents a share, or $966 million.
Also bolstering the quarterly numbers were revised accounting rules that took effect Jan. 1. The modifications added $137 billion of assets to Citibank’s balance sheet. Citigroup assets were at $2 trillion at quarter’s end, up 8 percent sequentially.
“We are proud of our first quarter results but remain cautious about the environment, given the uncertain economic recovery and high unemployment in the U.S.,” said Vikram Pandit, Citi’s chief executive officer. “Realistically, we do not expect our performance to follow an invariable trend-line upward.”
Citigroup revenues were $25.4 billion, up $7.5 billion sequentially – excluding a $10.1 billion pre-tax loss from the bailout repayment and exit from its loss-sharing agreement with the U.S. Treasury in the fourth quarter of 2009.
Citigroup’s quarterly performance was enhanced by strong investment bank earnings and less provisions needed for loan losses – as was the case in higher than expected profits from JPMorgan Chase and Bank of America reported last week.
Citi’s securities and banking net income of $3.2 billion was up $2.9 billion from the prior quarter.
“Our performance was aided by stability in the capital markets and improvement in the global business climate,” Pandit said.

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