Citigroup Profit Rises 20 Pct. to Record
Monday October 20, 8:38 am ET
By Jonathan Stempel
biz.yahoo.com
NEW YORK (Reuters) - Citigroup Inc. (NYSE:C), the world's largest financial services company, on Monday said third-quarter profit rose 20 percent to a record high, helped by double-digit growth in its consumer business and in investment banking.
The New York-based company, which has $1.21 trillion of assets, said net income rose to $4.69 billion, or 90 cents per share, from $3.92 billion, or 76 cents per share, a year earlier. Analysts polled by Reuters Research, a unit of Reuters Group Plc, on average forecast profit of 85 cents per share.
Excluding discontinued operations, Citigroup earned $3.71 billion, or 72 cents per share, a year earlier.
"It was a solid quarter with good execution all around," said David Katz, chief investment officer for Matrix Asset Advisors Inc. in New York, whose $950 million of assets include 516,000 Citigroup shares. "Citigroup is benefiting by improving capital markets and reducing credit losses."
Revenue rose 10 percent to $19.4 billion, while operating expenses rose 14 percent to $9.6 billion. The company said it set aside $1.61 billion to cover bad loans, down 40 percent, while its total allowance for credit losses rose 5 percent to $11.2 billion. Profit from outside the United States totaled $1.23 billion, up 29 percent.
The quarter was the last under the helm of 70-year-old Sanford "Sandy" Weill, the legendary Wall Street dealmaker, as chief executive. Charles Prince, 53, Weill's longtime confidant and head of Citigroup's global corporate and investment bank, became chief executive on Oct. 1. Weill remains chairman.
"All of our businesses made solid progress," Weill said in a statement.
Citigroup shares rose to $48.50 in pre-market trading from a closing price of $48.38 Friday on the New York Stock Exchange . Through Friday, they had risen 37 percent this year, compared with a 15 percent rise in the Standard & Poor's banks index.
GAINS ACROSS SECTORS
Profit in Citigroup's global consumer business rose 14 percent to $2.52 billion, including a 26 percent rise in retail banking income to $1.09 billion and a 16 percent rise in credit card income to $985 million. Consumer finance income fell 13 percent to $467 million, hurt by Japan.
The company received approval last week to buy Sears, Roebuck & Co.'s (NYSE:S) credit card portfolio, which Sears said generated $366 million of third-quarter operating income.
Some analysts expect Prince to buy U.S. banks, and Citigroup has said it wants to expand in several parts of the country. Citigroup last year bought California's Golden State Bancorp, one of the largest savings and loans, and in 2001 bought European American Bank.
Citigroup said global corporate and investment bank profit rose 31 percent to $1.37 billion. Banking income rose 27 percent to $1.17 billion, as rising stock markets and low interest rates fueled stock and bond offerings.
The company in April agreed to pay $400 million, more than any other bank, in the $1.4 billion global settlement with regulators over biased stock research. Earlier this month, its Smith Barney brokerage unit fired a broker for canceling mutual fund trades after the market closed.
Global investment management profit rose 17 percent to $367 million, and private client services profit rose 8 percent to $203 million. Proprietary investment activity swung to a profit of $96 million, while corporate and other profit, including treasury management, more than doubled to $136 million. |
