Citigroup surprises with profit

Citigroup Inc provided more evidence that America's big banks may have turned a corner. The bank reported a surprise first-quarter profit Monday as trading revenue offset losses from failed loans.

Citigroup said it earned US$4.4 billion after payment of preferred dividends, compared with a loss of US$696 million a year earlier. That was the bank's biggest quarterly profit since the second quarter of 2007.

The company cited strong trading of bonds, stocks and other securities for its big profit. Citigroup, one of the hardest hit banks during the credit crisis and recession, said loan losses fell for the third consecutive quarter. The amount of money it set aside for loan losses also fell.

Citigroup earned 15 cents per share on revenue of US$25.4 billion. That easily beat analysts' expectations of a slight loss, according to Thomson Reuters.

Citigroup's strong showing follows similarly impressive results last week by Bank of America Corp and JPMorgan Chase & Co. That has boosted hopes that the worst of the credit crisis has passed and banks may be entering a period of sustained profitability.

Yet CEO Vikram Pandit sought to dampen short-term expectations for Citigroup, saying the bank remained cautious "given the uncertain economic recovery and high unemployment in the US."

"Realistically, we do not expect our performance to follow an invariable trend-line upward," he said. "Longer-term, however, the prospects for Citigroup are clear and bright."

Pandit sounded a little less upbeat about the economy than his counterparts at JPMorgan Chase and BofA. But Citigroup's recovery from the devastation of the financial markets has been more difficult.

The bank's stock rose about 1 percent in pre-opening trading. Other financial stocks extended a pullback in response to news that the government was charging Goldman Sachs Group Inc with civil fraud for mortgage-related transactions.

Citigroup said its total reserves to cover losses from bad loans fell 22 percent, or US$2.4 billion, from the fourth quarter to its lowest level in two years.

Source:Xinhua