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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. |
| The US bank reported net income of $3.8bn (£2.4bn), marking its seventh consecutive quarter of being in 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. | 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. | 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. | 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. | 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 | Improved asset quality |
| Citigroup is the third biggest bank in the US by assets and received two government bailouts in 2008. | 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 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. | 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. | 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. | 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. | "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. |