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Citigroup (C) said first-quarter profit rose 30 percent as revenue from fixed-income trading and investment banking exceeded analysts' estimates.
April 15 -
CEO Michael Corbat presided over an executive-studded branch opening in Washington on Wednesday, promoting Citigroup's commitment to tech-heavy urban locations even as the bank closes branches elsewhere.
April 10 -
Citigroup's disappointing fourth-quarter report included an unexpected $500 million legal reserve related to its U.S. consumer businesses, as the CFPB reviews the bank's card products.
January 17 -
Citigroup's (NYSE:C)
Yes, Chief Executive Michael Corbat still has work to do to fix the New York bank, and once again its financial report was riddled with accounting adjustments and reserves for legal settlements.
But this time Citigroup managed to report year-over-year revenue growth and
Citigroup's 6% revenue growth, helped largely by its bond trading and investment banking businesses, stood in marked contrast to the falling revenue
"It was a really good quarter" with "pretty decent quality" results, says Nuveen analyst Alan Villalon.
Corbat "is trying to get better operating fundamentals and you could see him focusing on taking expenses down," Villalon adds, referring to the
Bank executives were less willing to commit to more cuts. While expenses fell 10% on a quarterly basis, they actually ticked up 1% from a year earlier, to $12.4 billion. During a conference call with reporters, Chief Financial Officer John Gerspach said the bank's campaign to trim expenses "will remain evident throughout the rest of the year" but downplayed the possibility of further wide-ranging layoffs.
"I don't think we're contemplating any large-scale repositioning," he said, before resorting to a baseball analogy: "It's going to be a series of singles" rather than a home run, he said.
Legal expenses also continued to hang over the bank; after taking a $500 million legal and regulatory reserve related to its U.S. consumer businesses in the fourth quarter, Citigroup took another $500 million in similar reserves towards its "special asset pool" unit in Citi Holdings, the repository of businesses that the bank is trying to sell or wind down. Gerspach would not be more specific about what Citigroup is reserving against.
But the bank still managed to earn $3.81 billion, or $1.23 per share, and record $20.5 billion in revenue, beating analysts' expectations. Citigroup's profit rose 30% from a year earlier, when the bank earned $2.93 billion, or 95 cents per share. Excluding the accounting adjustment this year, the bank earned $1.29 per share, beating analysts' average estimate of $1.17 per share.
The results appear to give further validation to Corbat, who abruptly replaced ousted CEO Vikram Pandit in October with the mandate to accelerate Citigroup's recovery from the financial crisis without drastically changing Pandit's strategy.
Since October, Corbat has slimmed down part of Citigroup, closed branches and pulled back from some of the international markets where it operates. But he has stopped short of broadly shrinking Citigroup's footprint or business operations, and last week even
He said Monday that the relatively clean first-quarter results were a good mark of progress for Citigroup, though he would not guarantee that all future quarters will be as simple.
"Achieving consistent, high quality earnings is one of my top priorities and these first quarter results are encouraging," he told investors during a conference call. "However, although this was a good start for 2013, the environment remains challenging and we're sure to be tested as we go through the year ahead."
Overall loan levels stayed essentially flat from a year earlier, at $646.4 billion; consumer loans fell 5% from a year earlier, while corporate customers borrowed 8% more than they did a year earlier.
Lending at JPMorgan rose 1% to $728.9 billion; Wells reported loans of $798 billion, up 3.8%.
Executives had a relatively sober outlook for the lending business. Gerspach told investors that U.S. consumers still have "a decent amount of deleveraging still under way. I certainly don't see any releveraging necessarily on the part of the U.S. consumer, other than refinancing mortgage loans and perhaps taking out more student lending, maybe auto loans a little bit. We're not really in that business," he said. "From our point of view, getting more growth in the revolving balances, that's going to be a challenge over the course of the next couple of quarters."