Citigroup Quarterly Profit Nearly Doubles
Tuesday January 20, 7:44 am ET
By Jonathan Stempel
NEW YORK (Reuters) - Citigroup Inc. (NYSE:C - News), the world's largest financial services company, on Tuesday said fourth-quarter net profit nearly doubled, as consumer and investment banking income climbed.
The New York-based bank said net income rose 96 percent to $4.76 billion, or 91 cents per share, from $2.43 billion, or 47 cents per share, a year earlier. Consumer banking accounted for 56 percent of profit.
Analysts on average had forecast 90 cents per share. according to Reuters Research, a unit of Reuters Group Plc.
Excluding year-ago charges, Citibank said earnings rose 27 percent.
"Our organic growth momentum, combined with (our acquisitions), provide an unmatched platform from which to grow," Chief Executive Charles Prince, who took over the helm from former CEO and current Chairman Sanford "Sandy" Weill on Oct. 1, said in a statement.
Profit in the 2003 quarter was cut by $242 million for credit and trading losses related to Parmalat (Milan:PRFI.MI - News), the bankrupt Italian food group. Year earlier results included $1.55 billion of charges related to a stock research settlement, Enron Corp. (Other OTC:ENRNQ.PK - News) litigation, and bad loans.
Revenue rose 13 percent to $20.2 billion, and was up 4 percent from the third quarter's $19.4 billion. Expenses fell 6 percent from a year earlier to $10 billion, but rose 4 percent from the third quarter.
Full-year profit rose 17 percent to a record $17.9 billion, as revenue rose 9 percent to $77.4 billion.
The 54-year-old Prince has said he plans to pursue small acquisitions, and in November told investors that "the era of the transformational merger ... is over."
The announcement last week that J.P. Morgan Chase & Co. (NYSE:JPM - News) agreed to buy Bank One Corp. (NYSE:ONE - News) for $58 billion would create a company with about $1.1 trillion of assets, second to Citigroup's $1.26 trillion. Bank of America Corp.'s (NYSE:BAC - News) announced $47 billion purchase of FleetBoston Financial Corp. (NYSE:FBF - News) would make that company Citigroup's No. 2 rival, at least until J.P. Morgan finishes buying Bank One.
CONSUMER PROFIT RISES
Profit in Citigroup's global consumer business rose 14 percent to $2.66 billion. Retail banking income rose 24 percent to $1.07 billion, and credit card income rose 23 percent to $1.14 billion. Citigroup bought Sears, Roebuck & Co.'s (NYSE:S - News) $29 billion card portfolio during the quarter.
Profit outside the United States fell 12 percent to $1.12 billion, as Citigroup wrote down $351 million related to Parmalat. The bank said it has $302 million of remaining exposure to the company, whose links to Citigroup are being investigated by Italian authorities.
Bank of America last week said it had $274 million of Parmalat exposure, and wrote off $114 million in the quarter.
Corporate and investment bank posted a profit of $1.27 billion, compared with a year-earlier $326 million loss.
Investment management profit rose 4 percent to $431 million, private client services profit rose 39 percent to $237 million, and proprietary investments swung to a $107 million profit. Other activities posted a $42 million profit.
Last April, Citigroup agreed to pay $400 million, more than any other bank, in the $1.4 billion global stock research settlement. Its Smith Barney brokerage unit has fired several employees in connection with improper mutual fund activity.
Citigroup set aside $2.19 billion to cover bad loans in the quarter, down 18 percent.
Citigroup shares closed Friday on the New York Stock Exchange (News - Websites) at $49.50. Through Friday, the shares had risen 37 percent in the last year, compared with a 20 percent rise in the Standard & Poor's banks index.
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