Citigroup Posts $1.6 Billion Profit, First Since 2007
Capping off a week that has brought some better-than-expected news from the banking sector, despite a wake of other glum economic indicators, struggling banking giant Citigroup this morning announced that it posted its first quarterly profit since 2007.
The weakest of the major banks, Citigroup has seen losses each quarter since the fall of 2007, including a loss of $5.11 billion in the first quarter of 2008. But in the most recent quarter, the company announced, it turned a profit of $1.6 billion. While its credit costs added up to $10 billion, the bank's revenue, at $24.8 billion, was double what it was a year ago. Because of changes in the stock structure, there was still a per-share loss on Citigroup's common stock. But the decline of 18 cents per share was far less than the 34-cents-per-share loss that analysts had predicted.
Some other banks that have announced first-quarter profits said that they would soon repay government aid, but Citigroup did not go that far.
The news comes at the end of a week that has seemed to bring some promise to the banking sector. Yesterday, JPMorgan Chase & Co. reported that it posted a profit for the first quarter, earning $2.14 billion. In further good news, JPMorgan said that it could immediately pay back the $25 billion that it had borrowed from the government and that it won't need to use the public-private investment program announced by Treasury Secretary Timothy Geithner last month to get rid of "toxic assets." And Wells Fargo & Co., the second-biggest home lender in the United States, said that its net income in the first quarter was about $3 billion, compared with $2 billion one year earlier.
Although the news has come as encouragement that the federal government's bailout money to the banks is making a difference, concern remains that one of the bailout's main goals—increasing lending to consumers and businesses—hasn't been fully met. The Treasury Department reported this week that business lending dropped by 24 percent at 21 banks that have received more than $211 billion in funds from the government. The only increase was in mortgage lending, the department said.
advertisement
