Citigroup earns $2.15B as failed loans decrease
by Associated Press
Published: October 18,2010
NEW YORK – Citigroup Inc., one of the largest banks in the world, reported its third straight quarter of profit Monday in another sign that the American consumer is healing.
The New York bank, which is still 12 percent owned by the government, earned $2.15 billion, or 7 cents per share, in the three months ending in September. The results were better than analysts were expecting, and compared to a loss of $3.24 billion, or 27 cents per share, during the same period last year. Citi’s stock rose nearly 4 percent, lifting shares of other banks along with it.
Almost all of the profit came from dipping into funds that Citi had previously set aside to cover bad loans. That reflects the bank’s increasing level of confidence that its customers will be able to make payments on credit card and mortgage loans in the future.
In an encouraging sign, losses from bad loans fell 30 percent during the quarter to $7.66 billion as defaults in Citi’s retail partner cards, Citi-branded credit cards and real estate portfolios all fell. It was the fifth consecutive quarter of declining losses from soured loans.
The improvement in Citi’s earnings came as the bank released $1.97 billion in money it had previously set aside to cover bad loans.
Citigroup was one of the hardest-hit banks during the financial crisis of 2008 and received $45 billion in government aid, $25 billion of which was converted to stock. The government continues to reduce its stake in Citigroup and has indicated that it plans to sell off the entire stake by December.
So far, Citi has managed to steer clear from the ongoing foreclosure mess that has ensnared other major U.S. banks. Rivals Bank of America Corp. and JPMorgan have stopped most or all their foreclosures because of evidence that thousands of foreclosures were handled improperly.
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