New York: Citigroup's second-quarter profit jumped 24 per cent, beating expectations, as the bank lost less money on bad loans.
The bank made more loans during the period than in the first quarter, and with credit losses declining 35 per cent, it dipped into money previously set aside to cover bad loans by releasing reserves. Citigroup shares rose more than three per cent in premarket trading.
"The decline in net credit losses was just a huge improvement. That's really the driver here," said Timothy Ghriskey, co-founder of Solaris Group, which owns Citigroup shares.
The third largest US bank by assets reported net income of $3.34 billion (Dh12.2 billion), or $1.09 per share, bettering the 96-cent average estimate of analysts polled by Thomson Reuters/IBES. A year earlier it earned $2.7 billion, or 90 cents per share adjusted for a reverse stock split.
It is the sixth consecutive quarterly profit for Citigroup, which needed $45 billion in government bailouts to survive the fin-ancial crisis.
Since December, when the US government sold off the last of its common share stake in the bank, chief executive Vikram Pandit has been trying to show investors Citigroup can move beyond recovery to growth.
But boosting business has been difficult this year for most US banks, as weak fixed-income trading and market volatility have weighed heavily on results.
Revenue at Citigroup's securities and banking unit — essentially, its investment bank — fell eight per cent, hurt by an 18 per cent decline in fixed-income trading, to $3.033 billion.