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Citigroup makes profit in 2009

17 April 2009 16:53 (UTC +04:00)

Baku- APA-Economics. Citigroup swung to profit in 2009 with first-quarter earnings of 1.6 billion dollars, coming back from massive losses in 2008, the troubled banking giant said Friday.
Citi, which needed special help from the US government to weather the financial crisis, returned to the black in the January-March period following losses of 5.1 billion dollars in the same period last year and 18.72 billion for all of 2008.
Citi stockholders did not get a slice of the profit due to the special share arrangements of the banking group, and took a loss of 18 cents per share but this was not as bad as analyst projections of a loss of 34 cents per share.
"Our results this quarter reflect the strength of Citi’s franchise and we are pleased with our performance," chief executive Vikram Pandit said.
"With revenues of nearly 25 billion dollars and net income of 1.6 billion, we had our best overall quarter since the second quarter of 2007."
The US government owns a 36 percent stake in Citi following the latest bailout and conversion of special preferred shares to common stock.
But other Citi shareholders did not share in the profit because of dividend arrangements on the US government shares as well as other private stakes including from a Saudi prince and the Government of Singapore Investment Corporation.
Total revenues rose 99 percent from a year ago to 24.8 billion dollars and the company’s interest margins rose half a point to 3.3 percent.
The results come a day after JPMorgan Chase beat analyst forecasts with a profit of 2.1 billion dollars and comments from other major banks suggest an easing of the crippling credit crisis.
The optimism has helped Citi, which saw its share price fall more than 95 percent over the past year to under one dollar, but closed at 4.01 dollars on Thursday.
Jon Ogg at 24/7 Wall Street said shares appeared headed higher in premarket trades: "Citigroup is so far a winner this morning after a more than acceptable earnings report."
Citi, which has been hammered as a result of the US housing meltdown and subsequent credit crunch, said it had trimmed 13,000 jobs since the fourth quarter and 65,000 since peak levels to leave its total workforce at 309,000.
Its deposits remained steady at 763 billion dollars.
"While we and the industry face challenges in the coming quarters as we work through the weak economy, we will remain focused on strengthening the Citi franchise," Pandit said.
By segment, Citi said its consumer banking operations lost 1.2 billion dollars in the quarter, hurt in part by exchange rates but also from loan delinquencies.
Citi’s credit card operations managed a profit of 417 million dollars, but that was down 66 percent from a year ago on currency factors and write-offs of bad debt.
The results were lifted by Citi’s institutional client operations or investment banking, which made a profit of 2.8 billion dollars in the quarter.
Citi is being kept afloat by some 45 billion dollars from the US Treasury, which has moved to rescue a banking sector reeling from losses in the housing sector and securities tied to real estate.
The banking firm said it had not yet finalized plans to convert some US government and other preferred shares to common stock under an announcement made in February.
Citi said the exchange terms will be determined after the "stress tests" on the banking system ordered by the administration of President Barack Obama. Source: AFP