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Citigroup earnings report tops estimates

CitigroupCitigroup, the third largest US bank reported 42% increase in second-quarter profits which beat analysts forecasts. Citigroup’s capital levels rose sharply after receiving the compensation from the sale of its stake in Smith Barney, the retail brokerage, to Morgan Stanley. The bank reported a ratio of equity to risk-weighted assets of 10% under the new Basel III standards – better than most banks in the US and around the world.

Chief Executive Officer Michael Corbat, has cut thousands of workers and scaled back operations in some countries to reduce costs since taking charge of the bank in October.

“Citi has done a good job of de-risking its business by pulling out and cleaning up the Citi Holdings assets,” said Marty Mosby, an analyst with Guggenheim Securities LLC. “The critical element for long-term value creation is still a continued lessening of the drag from Citi Holdings.” he added for Bloomberg.

Citigroup’s net income jumped 26% to $3.9 billion after removing the CVA (credit value adjustment) effect and a $274 million loss from the sale of its stake in Turkey’s Akbank. Revenues rose 8% to $20 billion.

Shares of the company advanced 28% year to date to $50.81, the best performance among the top three U.S. banks. Citi shares rose 2% in pre-market trading to $51.86. JP Morgan Chase & Co., reported profit on July 12 of $6.5 billion, or $1.60 a share. Wells Fargo & Co., posted $5.52 billion, or 98 cents a share.

International consumer banking saw revenues increase by 5% to $4.7 billion. Net income was flat at $826m.

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