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Citigroup's third quarter earnings beat expectations | Citigroup's third quarter earnings beat expectations |
(40 minutes later) | |
Citigroup has reported a 74% increase in its third quarter profit. | Citigroup has reported a 74% increase in its third quarter profit. |
href="http://www.citi.com/citi/press/2011/111017a.htm" >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 benefited from a fall in the number of retail customers defaulting on their credit card bills and other loans. | |
However, the bank said revenues from its investment banking business were 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. |