Citigroup Quarterly Earnings Dip 10% to $2.7B

(CBS/AP)  Citigroup said Friday its second-quarter net income dropped 10 percent to $2.7 billion even as its losses from failed loans fell. The drop in income reflects the bank's sale a year ago of the Smith Barney brokerage, which inflated its earnings at the time.

Citigroup Inc. joined JPMorgan Chase & Co. and Bank of America Corp. in reporting earnings that rose in the April-June period as loan losses fell. That's a positive sign for the economy, because it indicates that consumers are having an easier time paying their debts. But Citigroup, like the other banks, also had a decline in trading revenue because of the stock market's plunge this spring. All three companies surpassed analysts' earnings forecasts.

Citigroup was among the hardest hit banks by the financial crisis of 2008, and it was further hurt as many customers fell behind in loan payments during the recession. The bank's losses from failed loans fell 31 percent to $7.96 billion during the April-June period from $11.47 billion a year ago.

Despite the improving trend, CEO Vikram Pandit remained cautious about future growth, saying in a statement that "economic conditions remain challenging."

Also Friday, Bank of America said its second-quarter net income rose 15 percent to $2.78 billion. On Thursday, JPMorgan reported its second-quarter earnings soared 77 percent to $4.8 billion.

Like JPMorgan, Citigroup also removed some money from its reserves for future loan losses, which helps boost earnings. It's also an indication that the bank is becoming more confident that the worst of the defaults is over and that delinquency and default levels are likely to shrink in the coming quarters.

Citigroup removed $1.51 billion from its loss reserves during the quarter. A year earlier, the bank added $4 billion to those reserves.

John Gerspach, Citi's chief financial officer, said during a conference call with reporters that reserves could be released in future quarters as well if credit trends continue to improve.

Loan losses have dropped four straight quarters, and Gerspach said he was particularly encouraged by a slowdown in new delinquencies in the credit card business.

Companies Piling Up Cash But Not Adding Jobs

"It's a business I'd expect to get back on its feet through 2011," Gerspach said of Citi's big credit card lending division. He wasn't as optimistic that delinquencies from mortgages would drop as fast as those from credit cards.

The stock market's slump sent Citigroup's revenue from its securities and banking division down 11 percent from a year earlier to $6 billion. That was down 26 percent from the first quarter.

The slowdown came as more customers avoided the stock market.

"Volumes were down dramatically," Gerspach said. "There was an awful lot of people on the sidelines."

Citigroup said it earned $2.7 billion, or 9 cents per share, during the April-June period. That compares with $3 billion, or 49 cents per share, during the same quarter last year. The year-ago period's profit was inflated because Citigroup recorded an after-tax gain of $6.7 billion during the quarter from the sale of a majority stake in Smith Barney to Morgan Stanley.

Analysts forecast the bank would earn 5 cents per share.

Total revenue fell 33 percent to $22.07 billion from $33.1 billion during the year-ago period. Citigroup's revenue fell just short of the $22.16 billion analysts had forecast.

Citigroup received $45 billion in government bailout money during the 2008 financial crisis. The company repaid $20 billion of the money late last year and the rest was converted into common stock. At the time Citi repaid the $20 billion, the government said it would sell the $25 billion in stock by the end of 2010.

Earlier this month, the government said it has now sold a total of 2.6 billion shares at a profit. It still owns 5.1 billion shares.

Shares of Citi dropped 14 cents, or 3.5 percent to $4.02 in early morning trading as the broader market fell.

During the credit crisis, Citi split its operations into two divisions as part of its plan to return to profitability.

Citi Holdings, which holds assets the company decided to sell including its worst-performing loans, lost $1.21 billion during the most recent quarter, compared with a profit of $1.22 billion last year. The year-ago figures includes the gain from the sale of Smith Barney.

Profit in the Citicorp division, the unit that operates its primary businesses which are considered fundamental to future growth, rose 17 percent to $3.78 billion during the second quarter.

[Simifanene]

Corporate America's Republican puppets and Corporate America want America to suffer as much as possible unti the 2012 election. As soon as Obama took office Corporate America layed off millions. Financial records show that the huge Corporations that support the Republicans have made huge profits since Obama was elected, but have not done nothing but fire the common man. The Republican's have been obstinate for a purpose. One of selfishness, based upon the greed of Corporate America. The Republicans refuse to legislate grave matters. They've refused to work our any agreements on vital issues, hoping Obama and the Democrats will fail. Corporate America whom backs the Republican majorities Campaign funds with billions of dollars that they squeezed out of the common mans pockets. Corporate America wants to pay no taxes and is deeply opposed to Obama and the Democrats who represent you and I. They will work together to defeat Obama and the Democratic majority in anyway possible, to be relected. Even if it means the suffering of you and I. We must stand together and respond to their greed and selfishness with our votes against the Republicans and Corporate America. The Democratic Majority have been the only legislators representing all of us for the last ten years. Bush and his Republican majority less than two years ago left America almost bankrupt, with the auto, fincancial, and real estate market at the very edge of failure. Corporate America's greed is powerfull and hurts all of us and is keeping America from recovery. We must keep supporting Obama and the Democratic majority by voting out the obstinate Republican puppets. Obama is leading us away from the mini depression and two foolish wars the Democrats inherited. The auto industry is booming, the housing market and financial market have stablized. all in less than two years, even though Corporate America is in opposition with it's puppet Republicans dancing on their strings.

[realist51]

wow! its so sad that they only made 2.7 billion dollars this quarter instead of 3 billion holy sheep s#$t the financil market needs another bail out. sure beats the crap out of the 12,000 i grossed for the quarter that doesn't include the payraise i didn't get and the additional health ins increase i had to pay for or higher gas prices food prices and energy prices, i feel for ya citi. too ya made 100 million less than the other bank and they were happy about making a profit.

[consciousnes]

AW, only 2.7 BILLION, that is terrible, just what are they going to do?

[mrjustice1]

ONLY A SMALL MINORITY "GET IT" REGARDING LEGISLATING LICENSES TO STEAL(FROM US)


If the so-called reform measures continue to facilitate constant cash flow pipelines to feed the Wall St Banker/Broker/Legislator Connection, stamped "Comprehensive Wall St Reform" then we have been duped again!
The new label is tantamount to "the same old wine but in a new bottle", purportedly disguised as "Sweeping Wall St Reform".


WE HAVE ALREADY LOST AMERICA AS THE RESULTS OF PARASITIC WALL ST INVESTMENT BANKERS', BROKERS', FINANCIERS', THEIR LAWYERS' AND THEIR AGENTS' GREEDY AND SELFISH FINANCIAL SCHEMES,
MANY OF WHICH WERE DELIBERATELY SET UP AND WERE INDEED CALCULATED FINANCIAL SWINDLES

These financial professionals have for decades used their knowledge and expertise to professionally market their often complex, hyped, overvalued and even worthless investment products. When they pull off their huge capital-raising and similar investment swindles, they congratulate themselves and refer to it as success. Nice values to instill into their and our young people!
Now our legislators who are intimately involved and dependent on their continuing systemic cashflow in exchange for immunity legislation, are planning to drain the new/next batch of investors last drops of blood.


THE MASSIVE BAILOUTS ESSENTIALLY LEAVE THE CRIMINAL WALL ST ELEMENT INTACT

Yes, the foxes continue to guard the hen coops, and their bad(criminal) behavior has indeed been rewarded by our cash-and-the-good-life-dependent legislators in the name of emergency 'quantitative easing'.