Citi storms to biggest profit in three years
THE US government is tipped to kick-start its sale of Citigroup shares soon, after the bank beat Wall Street expectations to nearly triple its profits in the first quarter.
Citi’s stock climbed seven per cent to $4.88 on news the bank made $4.4bn (£2.9bn) in the three months to March, up from $1.6bn a year ago, its biggest profit since 2007. Earnings were 15 cents per share compared with a loss of 18 cents in 2009.
When the New York market closed, the American taxpayer’s stake in the bailed-out institution was worth $37.6bn – giving a profit of $12.6bn on equity bought at the height of the financial crisis. The US Treasury has said it will sell off its 7.7bn shares in tranches throughout this year.
Richard Staite, an analyst at Atlantic Equities, said: “You can assume the US government will be taking advantage of the strength in [Citi’s] share price to begin selling sooner rather than later.”
Citi announced revenues of $25.4bn for the quarter, down slightly from the $27bn turned over 12 months ago. Like JPMorgan last week, Citi said performance was driven by its investment banking unit, with the fixed income division proving particularly busy.
Bad loan provisions fell $2.4bn to $8.6bn while net credit losses declined $1.6bn to $8.4bn.
The numbers were cheered by analysts, who predicted the bank would simply break even for the period. Chris Kotowski of Oppenheimer said: “Revenue was above expectations and expenses were below, so it’s a great set of figures.”
But chief executive Vikram Pandit, brought in at the end of 2007, adopted a cautious tone: “Realistically, we do not expect our performance to follow an invariable trend-line upward.”
One of the worst-hit Wall Street players during the banking sector meltdown, Citi was forced to accept $45bn of state aid in several packages. It repaid $20bn of loans in December, with the remainder tied up in shares.