CITIGROUP reported improved first-quarter earnings yesterday, with steady growth in the bank’s globe-spanning consumer businesses and a rebound in investment banking from a poor previous quarter.
Net income was $3.4 billion in the first quarter compared with $3.2 billion a year earlier as revenue grew just 1 per cent to $20.2 billion.
Those measures exclude the impact of so-called “debt valuation adjustments” – an accounting rule that makes companies take gains or losses from swings in the price of their own debt. On a reported basis, including DVA, Citi’s net earnings were down at $2.9 billion.
The company made no mention in its results of its embarrassing failure to secure permission from the Federal Reserve to return more capital to shareholders.
But Vikram Pandit, chief executive of Citi, said in a statement that “we continue to be one of the best capitalised banks in the world”.
“While the operating environment improved in the first quarter, there is still much macro uncertainty and we will continue to manage risk carefully,” said Mr Pandit.
Citi’s investment bank saw underlying revenue rise 6 per cent to $6.7 billion, with a strong performance in fixed-income sales and trading making up for a weaker equities business. Net income in the investment bank was $2.1 billion compared with $1.8 billion a year earlier and a loss of $118 million in the final quarter of last year.
Citi acknowledged it had lost $504 million on hedges as credit spreads tightened during the quarter.
Following JPMorgan Chase’s weakest quarter in advisory revenues for seven years, Citi also posted a sharp decline, with revenues falling 23 per cent as companies continued to be wary of big acquisitions.
Global consumer banking, the biggest operating unit, posted a 5 per cent increase in revenues at $10 billion and a 14 per cent increase in net income to $2.2 billion.
Citi Holdings, the “bad bank” that Citi used after the crisis to quarantine and run off its weak assets, continued its managed decline. – (Copyright The Financial Times Limited 2012)
