Citigroup has reported a 74% increase in its third quarter profit.
The US bank reported net income of $3.8bn (£2.4bn), marking its seventh consecutive quarter of being in profit.
The earnings were helped by the fact that the business set aside less money to cover bad loans.
Revenues were also lifted by an accounting gain, termed a credit valuation adjustment (CVA), which lenders can make when the markets are turbulent.
Citigroup said its revenues would have been 8% lower on the year had it not made the change to its numbers.
JP Morgan Chase made a similar adjustment to its profits when it reported a 4% fall in its net income last week.
Improved asset quality
Citigroup is the third biggest bank in the US by assets and received two government bailouts in 2008.
The latest results suggest its exposure to risky assets has continued to fall.
The bank said its holdings of non-accrual corporate loans was 58% lower than the previous year at $4.2bn, while its exposure to non-accrual consumer loans fell 36% to $7.9bn.
Loans are classed as being non-accrual if the borrower does not pay off the interest rate or principal for 90 days or more, putting them at risk of default.
Citigroup said it also planned to retain its store card business. The unit issues credit cards using retailers' brands, rather than that of the bank.
Historically customers had been more likely to default on these types of cards, and the division had been earmarked for disposal. But the bank says the unit earned $2.2bn over the first nine months of the year, and it now plans to reintegrate it with its main Citicorp business.
The news from Citigroup's investment banking business was not as good, with net revenues 21% down on the year because of a drop-off in mergers and acquisitions, and corporate fund raising.
"Citi continues to navigate a challenging economic environment and delivered another quarter of solid operating results," said Vikram Pandit, the bank's chief executive.
Citigroup's shares rose 2% after its results were released.
Wells Fargo
The biggest mortgage lender in the US, Wells Fargo, also reported improved earnings.
The San Francisco-based bank reported net income of $4.1bn. That was 21% up on the prior year, but short of analysts' forecasts.
The firm said it had benefited from a rise in customer deposits and growth in its loan portfolio.
It said there had been a fall in the amount of its loans that had turned bad, the seventh quarter in a row that has been the case.
"The economic recovery has been more sluggish and uneven than anyone anticipated," said chairman and chief executive John Stumpf.
"We can't change the economic environment, yet we have worked hard to control the variables we can."
However, investors were concerned by a drop in the bank's revenue, which was 6% lower than last year's figure at $19.6bn.
The decline follows a range of new regulations imposed on the banking sector, including limits on overdraft fees and restrictions on raising credit card interest rates.
The bank's shares fell 5.8% after the news.
Source: www.bbc.co.uk
The US bank reported net income of $3.8bn (£2.4bn), marking its seventh consecutive quarter of being in profit.
The earnings were helped by the fact that the business set aside less money to cover bad loans.
Revenues were also lifted by an accounting gain, termed a credit valuation adjustment (CVA), which lenders can make when the markets are turbulent.
Citigroup said its revenues would have been 8% lower on the year had it not made the change to its numbers.
JP Morgan Chase made a similar adjustment to its profits when it reported a 4% fall in its net income last week.
Improved asset quality
Citigroup is the third biggest bank in the US by assets and received two government bailouts in 2008.
The latest results suggest its exposure to risky assets has continued to fall.
The bank said its holdings of non-accrual corporate loans was 58% lower than the previous year at $4.2bn, while its exposure to non-accrual consumer loans fell 36% to $7.9bn.
Loans are classed as being non-accrual if the borrower does not pay off the interest rate or principal for 90 days or more, putting them at risk of default.
Citigroup said it also planned to retain its store card business. The unit issues credit cards using retailers' brands, rather than that of the bank.
Historically customers had been more likely to default on these types of cards, and the division had been earmarked for disposal. But the bank says the unit earned $2.2bn over the first nine months of the year, and it now plans to reintegrate it with its main Citicorp business.
The news from Citigroup's investment banking business was not as good, with net revenues 21% down on the year because of a drop-off in mergers and acquisitions, and corporate fund raising.
"Citi continues to navigate a challenging economic environment and delivered another quarter of solid operating results," said Vikram Pandit, the bank's chief executive.
Citigroup's shares rose 2% after its results were released.
Wells Fargo
The biggest mortgage lender in the US, Wells Fargo, also reported improved earnings.
The San Francisco-based bank reported net income of $4.1bn. That was 21% up on the prior year, but short of analysts' forecasts.
The firm said it had benefited from a rise in customer deposits and growth in its loan portfolio.
It said there had been a fall in the amount of its loans that had turned bad, the seventh quarter in a row that has been the case.
"The economic recovery has been more sluggish and uneven than anyone anticipated," said chairman and chief executive John Stumpf.
"We can't change the economic environment, yet we have worked hard to control the variables we can."
However, investors were concerned by a drop in the bank's revenue, which was 6% lower than last year's figure at $19.6bn.
The decline follows a range of new regulations imposed on the banking sector, including limits on overdraft fees and restrictions on raising credit card interest rates.
The bank's shares fell 5.8% after the news.
Source: www.bbc.co.uk
No comments:
Post a Comment