Citigroup returns to profit, and CEO thanks taxpayers for bailout
Issued on: Modified:
After two years spent largely in the red, US banking giant Citigroup said that it had returned to profit, posting a profit of 4.4 billion dollars in the first quarter of 2010.
AFP - US banking giant Citigroup said Monday it had returned to profit after two years spent largely in the red, posting a profit of 4.4 billion dollars in the first quarter of this year.
Following on from blockbuster results reported by its rivals last week, the New York-based bank returned to the black after losing 7.6 billion dollars in the last quarter of 2009.
It was the firm's best quarterly result since mid-2007.
The company has struggled since the start of the financial crisis and required a government bailout of 45 billion dollars to stay afloat.
The beleaguered global bank lost 1.6 billion dollars in 2009, and a whopping 27.6 billion dollars in 2008, when the collapse of rival US investment bank Lehman Brothers propelled the worst financial crisis in decades.
Citigroup is the last of the major money-center banks operating in the shadow of a US government bailout of financial institutions whose foundations were shaken by the crisis arising from a home mortgage meltdown.
Chief Executive Vikram Pandit said the company had now turned a corner.
"Citi today is fundamentally a very different company from what it was only two years ago," he said.
"All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers, said Pandit.
"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."
The bank, once the world's largest, saw revenue increase by 7.5 billion dollars in the first quarter to 25.4 billion dollars, but that figure is still significantly down on last year.
In another sign that Citi's core business may be stabilizing, it said provisions for bad loans declined by 2.4 billion versus the last quarter.
Analysts said that could be a sign of further good news to come.
"Delinquencies have stabilized or improved across most categories, suggesting further reductions in loss provisioning," said Matthew Albrecht at Standard & Poor's.
At the height of the crisis, Citi's balance sheet had been awash with sour mortgage-based investments that lost the firm at least 30 billion dollars and prompted the massive taxpayer bailout.
Despite last quarter's encouraging 58 percent increase in US-based revenues, Pandit sounded a note of caution.
"We are proud of our first quarter results but remain cautious about the environment, given the uncertain economic recovery and high unemployment in the US," he said.
"Realistically, we do not expect our performance to follow an invariable trend-line upward."
That cautionary message did not dissuade investors, who sent the company's stocks up over six percent in early trading.
But the share price remains a long way off its highs.
Citi stock had traded for around 55 dollars a share before the crisis hit, compared to 4.80 dollars today.