Citigroup overseas earnings jump 74%

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A Citibank branch office in San Francisco, US. Citigroup announced its first profitable year since the economic crash with a quarterly profit of $1.3 billion or 4 cents a share compared to a loss of $7.6 billion or 33 cents a share one year ago. Photo - Justin Sullivan/Getty Images

Citigroup reported higher third-quarter earnings on Monday, helped by rising income from Asia and an accounting gain banks can take in turbulent markets.

Citigroup has continued its bounce back from near death announcing its seventh consecutive quarterly profit.

Citi, which received three US government rescues at the height of the financial crisis, is witnessing its problem loan portfolio shrink.

Citi chief executive Vikram Pandit said: “Citi continues to navigate a challenging economic environment and delivered another quarter of solid operating results.”

The bank made a third-quarter profit of $3.74bn, up 74% from a year earlier, boosted by an accounting adjustment, a reduction in losses associated with bad loans and strength in its international operations.

Citigroup’s extensive overseas operations helped the bank during the quarter, particularly in Asia, where income from continuing operations at its consumer banking business rose 14 percent.

“The bets they’re making in the international markets are paying off,” said Michael Holland, founder of Holland & Co LLC in New York.

Citigroup, the third-largest US bank by assets, reported net income of $3.77 billion, or $1.23 per share, up from $2.17 billion, or 72 cents per share, in the same quarter last year.

The third-quarter results included a pre-tax gain of $1.9 billion, or 39 cents per share after taxes, due to the bank’s widening credit spreads during the quarter. When a bank’s debt weakens relative to U.S. Treasuries, it can record an accounting gain because it could profit from buying back debt.

Overall operating expenses for Citigroup rose 8 percent from a year earlier. Operating expenses were $12.46 billion and have been hovering around that level since the fourth quarter of 2010. From the beginning of 2009 through the third quarter of 2010, quarterly operating expenses were typically closer to $11.9 billion.

“The portfolio not only fits the current credit environment but also our strategy of building and strengthening relationships with our corporate clients,” Pandit said.

Once the US’s largest financial services firm, Citi had to be bailed out by the US taxpayer three years ago after racking up record losses on sub-prime loans and other toxic debts. Pandit has been streamlining the firm while returning it to profitability.

[Exchange rate: US$1 = AED3.67]

Sources: Reuters, The Guardian?

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