Citigroup Profit Up 4% in Quarter

From the Associated Press

Citigroup Inc., the nation’s largest financial institution, reported that its earnings rose 4% in the second quarter on strong corporate and investment banking revenue, but the overall results fell short of Wall Street projections as the difficult interest rate environment held down consumer banking profit.

The weakness reported Monday in the U.S. consumer banking division at Citigroup could presage similar reports from the nation’s other major banks, which will be reporting results this week.

San Francisco-based Wells Fargo & Co. and U.S. Bancorp of Minneapolis are due to report earnings today, while Bank of America Corp. of Charlotte, N.C., the nation’s second-largest bank by assets, and New York-based JPMorgan Chase & Co., the third-largest U.S. bank, report results Wednesday.

In recent quarters, banks have reported rising profit because investment banking and market revenue have held up. But retail banking profit has been depressed because of narrow net interest margins, or the spread between the rate banks pay to borrow money and the rate they can charge on their loans. Margins have been squeezed as the Federal Reserve has raised short-term interest rates while long-term rates have been relatively flat.


Citigroup, which is headquartered in New York, said net income was $5.27 billion, or $1.05 a share, in the April-June period, up from $5.07 billion, or 97 cents, a year earlier.

Revenue was $22.18 billion for the quarter, up 10% from $20.17 billion a year earlier.

Analysts surveyed by Thomson Financial had projected second-quarter earnings of $1.06 a share on revenue of $22.6 billion.

Citigroup shares fell $1.18, or 2.5%, to $46.40. They have traded in a range of $42.91 to $50.72 over the last year.


Citigroup said its corporate and investment banking revenue surged 31% to $6.76 billion in the second quarter. Revenue from global wealth management rose 19% to $2.5 billion.

Revenue in the global consumer division, meanwhile, was up 5% to $12.6 billion. Growth in that division was especially strong overseas, where revenue rose 12% to $5.07 billion. Domestically, revenue was $7.57 billion, up 1% from a year earlier.

Charles Prince, Citigroup’s chairman and chief executive, acknowledged that “in our U.S. consumer business ... we are not where we want to be in terms of growth.”

Prince also said Citigroup opened “a record number of new consumer branches” in the second quarter, bringing the year-to-date total to 508.


Citigroup has some 200 million customers worldwide and operates in 100 countries.