April 14 - Citigroup fought off bad headlines and managed to boost profit despite lower trading and mortgage revenue. Fred Katayama reports.
Citigroup shrugged off the series of bad headlines in the latest quarter by boosting profit. Although revenue fell slightly, it raised its bottom line by drastically shrinking losses at its Citi Holdings unit that houses troubled assets. ISI analyst Glenn Schorr said, "We think the quarter was solid and speaks to Citi's true earnings power and hopefully puts some of the 'they can't make their targets' fears on the back burner." But like JPMorgan, it suffered from a steep drop in revenue from fixed income trading in a low interest rate environment. Like Wells Fargo, mortgage refinancing in the U.S. fell. The bank's earnings statement didn't comment on the bad news dogging the U.S.' third largest bank: the $400 million fraud at its Mexican unit, Banamex, and the Fed's rejection of its request to hike dividends and share buybacks. It noted, however, that legal expenses grew 33 percent. Separately, its CFO said the results included $165 million of additional credit costs for Mexican loan receivables. And he said Fed officials discussing its failed capital plan have issued no complaints regarding its business model. Citi's stock, which is down 12 percent this year, rose sharply higher on the better than expected results.