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Citigroup, Wachovia post strong profits

From the Associated Press

Citigroup Inc. said Friday that its second-quarter profit rose 18% on strong overseas operations that led to record revenue for the biggest U.S. bank.

Rival Wachovia Corp. also posted a double-digit profit jump for the quarter, but both banks saw their shares decline as they padded their provisions for loans that go sour -- a move many other banks have made as they gird themselves for a shakier credit environment.

New York-based Citigroup’s net income rose to $6.23 billion, or $1.24 a share, in the April-to-June period, from $5.27 billion, or $1.05, in the same period last year. Revenue grew 20% to a record $26.63 billion.

The results beat the average forecast of analysts surveyed by Thomson Financial of earnings of $1.13 a share and revenue of $24.89 billion.

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Although analysts and investors were pleased by Citigroup’s operating leverage and performance in wealth management and investment banking, they remained concerned about potential losses if credit quality worsens. Shares fell 40 cents to $50.73.

Charlotte, N.C.-based Wachovia, the nation’s fourth-largest bank, said its acquisition of California thrift Golden West helped fuel a 53% jump in its average loans, lifting net interest income 21% to $4.46 billion, compared with $3.68 billion a year earlier.

Wachovia said profit rose 24% to $2.34 billion, or $1.22 a share, compared with $1.88 billion, or $1.17, a year earlier. Revenue grew 20% to $8.69 billion.

Analysts had expected earnings of $1.22 a share on $8.4 billion in revenue, according to Thomson Financial.

Worries that Wachovia’s profit could suffer if credit conditions worsen drove its stock down $1.63 to $49.98.


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