Citigroup shares rose 3.3 per cent in pre-market trade in New York on Monday after the bank reported a Q1 net income of $4.4bn. Profit from continuing operations came in at 14 cents per share.
Investors had expected the bank to break even in the quarter.
Here follow the key points from the press release:
Highest Net Income Since The Second Quarter of 2007
Revenues of $25.4 Billion and Expenses of $11.5 Billion
Net Credit Losses of $8.4 Billion Declined for The Third Consecutive Quarter
Tier 1 Capital Ratio of 11.2%; Tier 1 Common Ratio1 of 9.1%
Tier 1 Common1 of $97 Billion and Allowance for Loan Losses of $48.7 Billion
Results Reflect The Adoption of SFAS 166/167
Citicorp Revenues of $18.5 Billion, Net Income of $5.1 Billion
Citi Holdings Revenues of $6.6 Billion, Net Loss of $887 Million
And the bank’s own comment:
Revenues2 grew $7.5 billion and net income increased $5.8 billion, excluding the $10.1 billion pre-tax loss from the TARP repayment and exit of the loss-sharing agreement with the U.S. government in the fourth quarter of 2009. Provisions for credit losses and for benefits and claims2 declined $2.4 billion sequentially to $8.6 billion, the lowest level since the first quarter of 2008.
Expenses were down 6% sequentially to $11.5 billion. “Citi today is fundamentally a very different company from what it was only two years ago,” said Vikram Pandit, Citi’s Chief Executive Officer.
“With its financial strength, strategic clarity, efficiency, world-class business talent, and unique global footprint, Citi is well positioned to benefit from the key drivers of economic growth in developed and emerging markets.
“We are proud of our first quarter results but remain cautious about the environment, given the uncertain economic recovery and high unemployment in the U.S. Realistically, we do not expect our performance to follow an invariable trend-line upward. Longer-term, however, the prospects for Citi are clear and bright. And our first quarter of this year has given us the best glimpse yet of the potential of ‘America’s global bank’.
“None of this would have been possible without the magnificent work of Citi’s people. They produced strong results by focusing on our clients’ needs, creating a much more efficient company, maintaining strict risk management discipline, and reducing our portfolio of non-core assets and its losses.
“Our performance was aided by stability in the capital markets and improvement in the global business climate. But the perseverance, hard work, and sacrifice of my colleagues throughout Citi have been the relentless and constant force driving our momentum.
“All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers. We are gratified that Citi has been able to repay their TARP investment in our company, with a substantial return, as well as create a significant increase in the value of their equity in Citi. “Still, that is not enough. We owe taxpayers a huge debt of gratitude for assisting us at a critical time. We are determined to repay this debt by continuing to build a strong company and contribute to America’s economic recovery,” Mr. Pandit added.
As previously disclosed, effective January 1, 2010, Citigroup adopted SFAS No. 166, Accounting for Transfers of Financial Assets, an amendment of FASB Statement No. 140 (SFAS 166) and SFAS No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167). The adoption of these standards includes the requirement that Citi consolidate certain of its credit card securitization trusts and eliminate sale accounting for transfers of credit card receivables to those trusts. As a result, reported and managed basis presentations are equivalent for periods beginning January 1, 2010.
For comparison purposes, prior period revenues, net credit losses, provisions for credit losses and for benefits and claims including managed net credit losses, and loans are presented on a managed basis. Managed presentations were applicable only to Citi’s North American branded and retail partner credit card operations in North America Regional Consumer Banking and Citi Holdings—Local Consumer Lending. For additional information, see Citi’s Historical Reformatted Quarterly Financial Data Supplement, filed on Form 8-K with the U.S. Securities and Exchange Commission on April 13, 2010. Key Items
* Citigroup revenues3 were $25.4 billion, up $7.5 billion sequentially, excluding the impact of the TARP repayment and exit of the loss-sharing agreement in the fourth quarter of 2009.
* Securities and Banking revenues more than doubled to $8.0 billion from $3.3 billion in the fourth quarter of 2009. Excluding the impact of CVA from both periods4, revenues increased $2.5 billion, or 48%, sequentially to $7.7 billion.
* Citigroup expenses decreased $796 million, or 6%, sequentially to $11.5 billion.
* Citigroup net credit losses3 declined $1.6 billion, or 16%, sequentially to $8.4 billion.
* Citigroup recorded a net release of reserves for loan losses and unfunded lending commitments of $53 million in the first quarter of 2010, versus a $755 million net build in the prior quarter.
* Citigroup’s allowance for loan losses was $48.7 billion or 6.80% of loans, up from $36.0 billion or 6.09% of loans in the fourth quarter of 2009, primarily reflecting the adoption of SFAS 166/167.
* Tier 1 Capital and Tier 1 Common1 ratios of 11.2% and 9.1%, respectively, increased significantly from the pro forma ratios as of year end 2009, after adjusting for the adoption of SFAS 166/167, which had a negative impact of 140 and 138 basis points, respectively.
* Book Value per share was $5.28, down from $5.35 in the prior quarter. Tangible Book Value5 per share was $4.09, down from $4.15 in the prior quarter. The adoption of SFAS 166/167 had a negative impact of $0.29 per share on both Book Value and Tangible Book Value.
* Continued support for U.S. economy and consumers. Since the start of the U.S. housing crisis in 2007, through the first quarter of 2010, Citi has helped more than 900,000 homeowners in their effort to avoid potential foreclosure. Citi has also been helping nearly 1.7 million credit card members manage their card debt through a variety of forbearance programs.
Related links:
Bank earning season goes on — BofA’s turn – FT Alphaville
Come one, come all, to the Great Citi Sale – FT Alphaville