Citigroup reports highest quarterly profit since financial crisis
17 April 2015
Citigroup Inc posted its highest quarterly profit since the financial crisis following a cost-cutting push, which helped the third-largest US bank overcome a slump in trading.
First-quarter net income rose 21 per cent to $4.77 billion, or $1.51 a share, which was the most since the second quarter of 2007, the firm said in a statement. Excluding accounting adjustments, earnings per share stood at $1.52.
Chief executive officer Michael Corbat is focused on targets for containing costs and boosting returns after winning Federal Reserve approval to up capital payouts to shareholders. The fourth quarter saw him put much of the bank's expenses from probes, severance and office closures behind by setting aside over $3.5 billion. According to chief financial officer John Gerspach, the move would resolve a ''significant portion'' of the firm's legal burden.
Reports quoted Shannon Stemm, an analyst at Edward Jones & Co, as saying it was a refreshing quarter for Citigroup to have, finally, some of those large legal and repositioning charges slow down. He added, the focus could now move more to some of the underlying business results.
According to commentators, the results showed the bank's efforts to streamline its business might be starting to pay off.
Citi had been going about putting its house in order by cutting costs and shedding assets that were not critical to its main businesses. It had sold retail operations in many countries and shrunk its US branch network.
Shares of the third biggest US bank by assets were up 2.3 per cent to $54.45 on Thursday.
The lenders' operating expenses were down 10 per cent to $10.88 billion in the first quarter ended 31 March as it spent less on employee compensation and advertising and marketing.
The bank was able to achieve its target of having operating expenses of about 55 per cent of revenue, chief financial officer John Gerspach said on a call.
Legal and restructuring costs were down to $403 million from $1.16 billion.
Revenue from investment banking, which formed part of Citi's institutional clients group, was up 14 per cent to about $1.20 billion. Overall revenue in the institutional clients group, however, fell to 1 per cent to $9.03 billion, hurt by lower fixed income trading revenue.
According to Gerspach, losses from Swiss currency trading hurt its rates and currencies results by 20 per cent, though he declined to give a figure.