New York: Citigroup Inc posted a $4.43 billion first-quarter profit as losses from bad loans declined.
The third-largest US bank posted net income to shareholders of 15 cents a share, compared with a shareholder loss of 18 cents a share, or $966 million, a year earlier.
Citigroup, long seen as the weakest of the major US banks, seems to be recovering now. In March, chief executive Vikram Pandit said the bank was on track to return to sustained profitability and that losses from its bad assets should be manageable if the economy does not tank.
But in a statement on Monday, Pandit cautioned that Citigroup’s road to recovery could remain rocky.
“Realistically, we do not expect our performance to follow an invariable trend-line upward,” he said, but added that the bank’s long-term prospects were “bright.” Citigroup shares rose 2 cents to $4.58 in premarket trading.
Through Friday’s close, the shares had risen 38% this year, surpassing the 28% rise in the KBW Banks Index. As the credit outlook has improved, the shares of the banks seen as riskiest have rallied more than their peers because these lenders have more to gain from a stabilizing economy.
Citigroup’s results, like those of other banks, were influenced by accounting rules that moved loans bundled into bonds back onto bank balance sheets.
Those rules, known as FAS 166 and FAS 167, boosted Citigroup’s assets and liabilities and decreased its equity. The rules also boosted Citigroup’s revenue compared with prior periods, because previously credit losses from loans that had been bundled into bonds, or securitized, hit revenue rather than counting as an expense.
The bank report adjusted results that reflect how prior quarters’ results would have looked had the company moved securitizations onto its balance sheet earlier.