Citigroup’s quarterly profit beat Wall Street estimates as the third-largest US bank cut expenses and benefited from an improved economy and more active capital markets after a dismal end to 2011.
Profit was also boosted by loan growth in the lender's core Citicorp division, strong fixed income performance, and continued improvement in credit quality that allowed Citigroup to release reserves set aside for bad loans.
"They continue to progress. They have headwinds that maybe only Bank of America has, but they seem to be managing those headwinds," said Gary Townsend, CEO of Hill-Townsend Capital. "It's a good quarter without being as superlative as JPMorgan's was."
JPMorgan Chase & Co beat Wall Street's expectations on Friday, helped by some of the same macro trends - a better economy and more active capital markets.
The results confirm investor expectations of a recovery after the European debt crisis roiled markets late last year, and they augur well for other major US banks such as Goldman Sachs, Morgan Stanley and Bank of America, all due to report results this week.
But the KBW index of bank stocks is already up more than 19 per cent this year, and investors are now turning their attention to determining the strength and extent of the recovery, which still lags the optimism of early last year.
Citigroup chief financial officer John Gerspach said demand for loans remains soft in the United States and Europe but continues strong in emerging markets.
Loan growth was particularly strong for trade finance, he added in a conference call with reporters.
Chief executive Vikram Pandit said in a statement, "While the operating environment improved in the first quarter, there is still much macro uncertainty and we will continue to manage risk carefully."
Citigroup's first-quarter net income fell 2 per cent to $2.93 billion, or 95 cents a share, from $2.99 billion, or 99 cents a share, a year earlier.
Revenue from the company's ongoing securities trading and investment banking business declined 12 per cent from the strong quarter a year earlier but rose 65 per cent from the weak 2011 fourth quarter.
Citigroup said earnings per share, excluding the impact of certain accounting adjustments for changes in the value debts and credits, were $1.11.
Wall Street analysts, who usually exclude such accounting items, had expected, on average, $1 a share.
Expenses were down 7 per cent from the fourth quarter and were flat with a year earlier, reflecting seasonal factors and the company's commitment to bring costs down for the year, Mr Gerspach said in the conference call.
A set of assets that the company has been selling off or running down since the financial crisis, declined 29 per cent from a year earlier to $209 billion, or 11 per cent of total Citigroup assets.
Reuters
