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Citigroup advances as Q1 profit beats on lower loan loss reserves

Published: 09:15 14 Apr 2014 EDT

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Citigroup Inc. (NYSE:C), the third-largest U.S. bank by assets, advanced in pre-market trading after reporting a 4 percent jump in first-quarter profit that beat analysts' expectations, helped by lower loan loss reserves.

The shares rose 3.8 percent to $47.40 at 8:14 a.m. in New York. The stock had lost 12 percent this year through April 11.

Net income grew 4 percent to $3.94 billion, or $1.23 per share, in the three months ended March 31, from $3.8 billion, or $1.23 per share, in the year-earlier period, the New York-based company said in a statement today. Excluding items, the firm earned $1.30 per share.

Analysts on average were looking for earnings of $1.14 per share

Citigroup said adjusted net income gained, driven by lower expenses and lower net credit losses, partially offset by the lower revenues and a higher effective tax rate.

Operating expenses dropped 1 percent to $12.1 billion. 

Citigroup's net credit losses decreased 15 percent to $2.4 billion. Citigroup released $673 million in loan-loss reserves set aside in earlier years, compared with $650 million in the year-earlier period.

Total revenue slid 1 percent to $20.1 billion from $20.2 billion, but beat analysts' estimate of $19.37 billion. 

“Despite a quarter that was difficult for our company, we delivered strong results," Chief Executive Officer Michael Corbat, who took over in October 2012, said in the statement.

Citigroup is benefiting from an improving global economy that's marking it easier for consumers and businesses to repay loans.

Net interest margin increased to 2.9 percent.

Net income from Citicorp, the company's core business, dropped 8 percent and revenue fell 5 percent because of a decline in revenue from bond trading and home mortgage lending.

Last month, Citigroup failed to win regulatory approval to pay a higher dividend and return $6.4 billion of capital to shareholders through stock buybacks.

Citigroup Inc. (NYSE:C) is the third of the top U.S. banks to report results for the first quarter. JPMorgan Chase & Co. (NYSE:JPM), the biggest U.S. bank by assets, reported a lower-than-expected 19 percent drop to $5.27 billion, impacted by weak revenue from fixed-income trading and mortgages.

Wells Fargo & Co. (NYSE:WFC), the biggest U.S. mortgage lender, posted a better-than-expected 14 percent increase to $5.89 billion as it continued to trim provisions for bad loans. 

Bank of America Corp. (NYSE:BAC) reports earnings on April 16. Goldman Sachs Group Inc. (NYSE:GS) and Morgan Stanley (NYSE:MS) announce results on April 17.

 

 

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