Citigroup turns $4.43-billion profit in first quarter

Citigroup Inc. said Monday that profit more than doubled as the global economic rebound trimmed costs for bad loans, trading revenue surpassed analysts’ estimates and the value of subprime mortgage bonds increased.

First-quarter net income of $4.43 billion followed a loss of $7.58 billion in the fourth quarter and a profit of $1.59 billion in the first quarter of 2009, New York-based Citigroup said. Adjusted per-share earnings were 14 cents. Analysts in a Bloomberg survey had estimated the company would break even.

Chief Executive Vikram Pandit, who is taking a $1 annual salary until the company turns consistently profitable, said in February that 2010 may show the “earnings potential of the new Citi” after two straight annual losses totaling $29 billion. Profit was the highest since the second quarter of 2007 as bad-loan costs fell 16% to $8.37 billion.

Citigroup shares advanced 32 cents, or 7%, to $4.88.

The bank’s assets increased 8% to $2 trillion, after accounting rule makers closed a loophole that had allowed banks to keep credit-card loans and other debt instruments off their balance sheets.

Revenue from continuing operations shrank 5.8% to $25.4 billion, while consumer-banking revenue rose 3.1% to $8.08 billion, Citigroup said.

Chief Financial Officer John Gerspach said the company took $800 million of write-ups on subprime mortgage bonds. Write-downs on subprime bonds were among the biggest causes of Citigroup‘s losses over the past two years.

“Our performance was aided by stability in the capital markets and improvement in the global business climate,” Pandit said in the statement.

Under bank accounting rules, bad-loan costs include charge-offs during the quarter as well as any increases or decreases of loss reserves for future defaults.

Charge-offs in the first quarter climbed to $8.38 billion from $7.28 billion. Overall, the bad-loan costs fell because the bank released $18 million from its reserves, compared with an increase a year earlier of $2.63 billion.

Revenue from trading and investment banking fell 34% to $8 billion. Citigroup had $6.59 billion of trading revenue.

Citigroup, which got a $45-billion bailout in 2008, repaid $20 billion of the funds in December. The remaining $25 billion was converted by the Treasury Department into 7.7 billion Citigroup shares, which have a market value of about $35 billion.

“All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers,” Pandit said. He said the company was “gratified” to be able to repay the government “with a substantial return, as well as create a significant increase in the value of their equity in Citi.”