Citigroup posts quarterly profit -- its first since ’07
It wasn’t pretty, but Citigroup Inc. finally got back into the black in the first quarter.
The beleaguered banking giant reported Friday that it earned $1.6 billion in the first three months of 2009, its first profit since late 2007.
Citigroup benefited from a trend that also helped Goldman Sachs Group Inc. and JPMorgan Chase & Co. in the quarter: a surge in bond issuance and trading, as investors hungered for fixed-income securities. The bond bonanza generated $5.5 billion in revenue for Citi in the quarter.
Other factors -- including reduced asset write-downs, smaller loan-loss provisions and an accounting-driven gain related to the company’s financial woes -- also played roles in restoring profit.
Despite the profit, Citigroup reported a loss of 18 cents per common share after accounting for dividends and other benefits to preferred stockholders. That was better than the 34-cent loss analysts had expected.
The company’s common shares jumped in early trading but closed down 36 cents at $3.65. The stock, which hit a low of $1.02 on March 5, had traded as high as $4.48 this week.
It remains to be seen whether Citigroup can build on its first-quarter results, as economic weakness weighs on its core consumer-banking business, which lost $1.2 billion last quarter after eking out a $52-million profit a year earlier. Revenue there slipped to $6.4 billion from $7.8 billion.
Earnings at the bank’s giant credit-card operation slumped to $417 million in the quarter from $1.2 billion a year earlier as revenue fell to $5.8 billion from $6.4 billion.
“The good news is that [asset] write-downs appear to be in the ninth inning,” David Trone, an analyst at Fox-Pitt Kelton, wrote in a report.
“But credit problems are just getting started,” he added, referring to rising loan losses in the consumer sector.
“On balance,” he said, “we suggest investors look but not leap until we get closer to a credit peak.”
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