Citi profit hit by brokerage sale

 
Tim Wallace
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PROFITS at Citigroup tumbled in the third quarter as it suffered losses on the sale of its stake in the Smith Barney brokerage.

The 87.6 per cent fall in profits to $468m (£291m) compares poorly with JP Morgan and Wells Fargo, who last week reported record third-quarters.

The brokerage was set up as a joint venture with Morgan Stanley, and when Citi sold its share of the unit it incurred a pre-tax loss of $4.7bn as the unit was sold for less than its previous valuation. But excluding one-off factors, profits came in at $3.3bn, up 27 per cent on the year, in part due to rising mortgage lending revenues.

Loans increased in every part of the Citicorp unit for the seventh consecutive quarter, with corporate loans up 17 per cent and retail bank revenues rising six per cent on the year. Total revenues in the unit rose three per cent, driven by a seven per cent jump in Latin America and Europe, Middle East and Africa, but slowed by a two per cent drop in Asia, where regulatory changes hit the business.

“Our core businesses showed momentum during the quarter as we increased lending and generated higher operating revenues,” said chief executive Vikram Pandit.

The bank’s core tier one capital rose to an estimated 8.6 per cent on a Basel 3 basis. Headcount at the bank fell two per cent on the year to 262,000.