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Citigroup lifts Dow futures as financials kick off earnings

By Steve Gelsi, CBS.MarketWatch.com
Last Update: 8:16 AM ET Jul 14, 2003

NEW YORK (CBS.MW) - Stronger-than-expected earnings from Citigroup helped lift Dow futures in pre-market trades on Monday as second-quarter earnings season kicked off with a hit from the financial sector.

Citigroup (C: news), a component of the Dow Jones Industrial Average, said its credit card and mortgage lending lifted quarterly earnings above Wall Street estimates.

Dow Jones futures are up 70 points as the bulls remain in charge on the heels of last week's runup. Citigroup shares rose 2.4 percent to $47.25 in pre-market trades on Instinet.

Citigroup posted income from operations of $4.30 billion, or 83 cents per share, up 12 percent and 14 percent respectively from year-ago levels.

The earnings per share were 3 cents ahead of the analysts consensus estimate compiled by Reuters Research.

"Citigroup's performance this year continues to be outstanding, with 12 percent income growth in the second quarter driven by an 8 percent increase in our total revenues. We also reached an important milestone this quarter, as our total stockholders' equity and trust preferred securities exceeded $100 billion," Sanford Weill, Chairman and Chief Executive Officer said in a press release.

Revenue rose 8 percent to $19.4 billion, amid revenue growth of 24 percent in retail banking, 7 percent in capital markets and 21 percent in private banking.

The banking giant said credit quality indicators have remained stable for both the consumer and corporate portfolios.

Shares of Citigroup rose 95 cents to $46.15 on Friday.

Bank of America outperforms

Meanwhile, Bank of America (BAC: news) said second quarter earnings rose to $2.74 billion, or $1.80 per share, up 23 percent from $2.22 billion, or $1.40 per share, a year ago. A survey of analysts by Thomson First Call forecasted earnings of $1.57 per share.

The bank said revenue grew 12 percent to $9.78 billion. It said credit losses declined from the prior quarter and year and were at their lowest level since first quarter 2001.

Provision for credit losses was $772 million, down 7 percent from the first quarter. In investment banking, it said: Global Corporate and Investment Banking earned $440 million, down 14 percent from a year ago. Revenue decreased 2 percent to $2.26 billion.

Bank of American's chief financial officer Jim Hance said in an interview on CBNC that the company has no interest in buying Sears' credit card business.

Bank of America shares rose $1.28 to $82.88 on Friday.

BB&T matches forecast

BB&T Corp. (BBT: news) said second quarter net income fell to $316.2 million, or 67 cents per share, compared to $328 million, or 68 cents per share last year on merger-related and other nonrecurring charges.

The Winston-Salem, N.C. bank reported operating earnings of $336.9 million, or 71 cents per share, up from 68 cents. The figure matched the forecast of 71 cents per share in a survey of analysts by Thomson First Call.

The company is forecasting 2003 EPS of $2.75 to $2.85 vs. $2.84 expected by Wall Street.

Shares rose 19 cents to $34.94 on Friday.

American Home Mortgage buys firm

On top of blockbuster earnings, the financial sector is also seeing a merger on Monday.

American Home Mortgage (AHMH: news) said it'll buy Apex Mortgage Capital (AXM: news) in a stock deal valued at $186 million, or $6.21 per share.

Under terms of the deal, each outstanding Apex share will be exchanged for 0.32 American Home shares.

Based on Friday's closing price of $21.19 for American Home's stock, the deal represents an 11 percent premium to Apex's closing price.

American Home expects the deal to be accretive to 2003 and 2004 earnings.


Steve Gelsi is a reporter for CBS.MarketWatch.com in New York.