Citi reports $4.4 billion profit for first quarter
As Citigroup announced a profit of $4.4 billion in the first quarter, its biggest in almost three years, the banking giant's Indian American CEO Vikram Pandit expressed cautious optimism about the future.business Updated: Apr 20, 2010 10:30 IST
As Citigroup announced a profit of $4.4 billion in the first quarter, its biggest in almost three years, the banking giant's Indian American CEO Vikram Pandit expressed cautious optimism about the future.
"We are proud of our first-quarter results but remain cautious about the environment, given the uncertain economic recovery and high unemployment in the US," said Pandit. "Realistically, we do not expect our performance to follow an invariable trend line upward."
Citigroup's $4.4 billion profit follows a loss of $7.6 billion in the previous quarter and compares with earnings of $1.6 billion in the first three months of 2009.
Investors have been anxious for Citigroup to return to a sustained level of profitability after the bank endured billions of dollars in losses over the past two years. The latest results suggest that it may have finally found its footing.
"Citi today is fundamentally a very different company from what it was only two years ago," Pandit said.
The company also made a point of disclosing it was not involved with last Friday's announcement by the Securities and Exchange Commission, which alleged that competitor Goldman Sachs defrauded investors in a sale of securities tied to subprime mortgages.
Citigroup's latest results were defined by two key trends: improving credit quality and a surge in trading activity.
The New York City-based bank said it experienced marked improvement in both its consumer and corporate loan portfolios provided a lift during the quarter.
Moderating loan troubles across its US residential mortgage business, for example, prompted the company to set aside less money for future loan losses.
Conditions also appeared to improve within the company's Citi Holdings division, which was created to house the firm's so-called "troubled assets" and businesses it has been looking to sell. Losses within the unit narrowed to $876 million from $2.5 billion in the fourth quarter of 2009.
But the biggest driver of Citi's results was its securities and banking division, particularly its bond trading business. Revenue from that unit more than doubled from the previous quarter to $5.4 billion.
Pandit, who has been under scrutiny for his ability to lead the company, also warned that profits within the firm's other divisions were also susceptible.
The bank's consumer lending business, he noted, could suffer if Washington attempts to enact a severe new set of rules for Wall Street or if the recovery in the US economy gets derailed.