Citigroup reports 26% rise in quarterly profitMonday 15 July 2013 13.48
Citigroup has reported a stronger-than-expected 26% rise in adjusted quarterly profit, as stronger home prices reduced losses on mortgages, and trading revenue rebounded.
Adjusted net income rose to $3.89 billion in the second quarter, from $3.08 billion a year earlier, the third-largest US bank by assets has said.
The adjusted results excluded the positive impact of changes in the value of the company’s debt.
Revenue from fixed income markets rose 18% to $3.37 billion, while equity market revenue rose 68% to $942 million.
Trading revenue in the year-earlier quarter was weak across the industry as a slowdown in the business coincided with the stunning revelation by JPMorgan Chase & Co that it had lost billions of dollars on derivatives.
Citigroup's net credit losses declined to $2.61 billion from $3.49 billion as higher house prices lifted the value of the home mortgage assets the company has held since the financial crisis.
Earnings were also boosted by the company's drawdown of $784 million of reserves that it had taken earlier against loan losses that have not materialised.
The draw follows a reserve release of $1.01 billion in the year-earlier quarter.
Citi's shares had risen about 28% this year up to Friday's close, slightly better than the KBW index of bank stocks. They have doubled in value in the past year.
The stock rose through the end of May on investor confidence in the company's restructuring and its growth potential in emerging markets. But they have faltered since early June amid signs that emerging market economies are slowing down.
Chief Executive Mike Corbat has been moving to cut costs and increase earnings since October when Citigroup's board put him in the job after ousting Vikram Pandit.
But Corbat and Chairman Michael O'Neill have said they are sticking with Pandit's strategy of positioning the company to benefit from global growth in emerging markets, urbanization and increasing digital commerce.
"Citi is a restructuring story and it is an emerging markets story," analyst Fred Cannon of Keefe, Bruyette & Woods said before the company reported results.
Citigroup is the most global of the big US banks. About 58% of its revenue last year came from outside of North America.