(RTTNews) - Financial services giant Citigroup Inc. (C: News ) on Friday reported a 24 percent increase in profit for the second quarter, reflecting an improvement in credit costs that offset a decline in revenue. Earnings per share for the quarter topped analysts' expectations. The company's second-quarter net income was $3.34 billion or $1.09 per share, up from $2.70 billion or $0.90 per share in the previous-year quarter. Net income also increased from $3.00 billion or $0.10 per share in the preceding first quarter.
On average, 23 analysts polled by Thomson Reuters expected earnings of $0.97 per share for the quarter. Analysts' estimates typically exclude one-time items. The earnings per share reflects Citigroup's 1-for-10 reverse stock split, which was effective May 6, 2011.
Total revenues for the quarter declined 7 percent to $20.62 billion from $22.07 billion in the year-ago period. Analysts had a consensus revenue estimate of $19.94 billion. Revenues increased 5 percent from $19.73 billion in the preceding quarter.
The decline in revenue from the year-ago period reflects a 1 percent decrease in Citicorp revenue to $16.35 billion and an 18 percent decline in Citi Holdings revenue to $4.01 billion.
Vikram Pandit, Citigroup's Chief Executive Officer said, "We produced growth in both loans and deposits in Citicorp, reduced assets in Citi Holdings, continued to invest in our core businesses, and improved our financial strength. Although the near-term macroeconomic outlook is uneven, Citi is consistently profitable and we remain focused on producing responsible growth by serving our clients."
Total cost of credit for the quarter declined 49 percent from the year-ago period to $3.39 billion. This reflects a 35 percent decline in net credit losses to $5.15 billion and a $2.0 billion release of credit reserves due to a lower level of inherent losses remaining in the portfolio.
At Citicorp, revenue growth in Citicorp's International regional consumer banking or RCB businesses and in transaction services was offset by declines in securities and banking, and North America RCB. However, investment banking revenues surged 61 percent from the prior-year period to $1.09 billion. North America revenue declined 12 percent, while revenue increased in both Latin America and Asia.
Citicorp's end of period loans grew 16 percent from the prior-year period, with consumer loans rising 11 percent and corporate loans climbing 22 percent.
The decline in CitiHoldings revenues was principally due to the ongoing declines in assets, which fell 34 percent from the prior-year period to $308 billion. Citigroup noted that since reaching its peak in the first quarter of 2008, Citi Holdings assets are now over half-a-trillion dollars lower.
At the end of the second quarter, the bank's tier 1 capital ratio and tier 1 common ratio reached 13.6 percent and 11.6 percent, respectively. This represents an increase of 161 basis points and 189 basis points, respectively, from the year-ago quarter.
In Friday's pre-market, the stock is trading at $40.23, up $1.21 or 3.10 percent from Thursday's close. The stock is trading in a range of $36.30-$51.50 in the past 52 weeks.
by RTT Staff Writer RTT News July 15, 2011
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