AI
ER - Citigroup Net Climbs 24% on Advisory Fees;
Shares Drop on Expense Forecast
Citigroup Inc. (C), the third-biggest U.S. bank, said profit rose 24 percent, beating analysts’ estimates on higher investment-banking fees and reductions in loan-loss reserves. The shares declined after the bank said expenses will be higher than previous forecasts.
Second-quarter net income rose to $3.34 billion, or $1.09 a share, from $2.7 billion, or 90 cents, in the same period last year, New York-based Citigroup said today in a statement. The average estimate of 23 analysts surveyed by Bloomberg was for earnings per share of 96 cents.
A 61 percent gain in investment-banking revenue at Citigroup, led by Chief Executive Officer Vikram Pandit, mirrored the results JPMorgan Chase & Co. (JPM) reported yesterday. A $2 billion release from loan-loss reserves also bolstered earnings. The results countered a decline in trading revenue from the first quarter and allowed Pandit to post a sixth straight profitable quarter.
“Investment-banking results, particularly on the trading front, were much better than we expected,” Charles Peabody, an analyst with New York-based Portales Partners LLC, said in an interview on Bloomberg TV. “Their investment banking, which would be mergers and acquisitions and underwriting, was up very strong both quarter over quarter and year over year.”
Citigroup shares declined, erasing an earlier gain, after the company said on a conference call with analysts that expenses would remain elevated through the end of this year. The stock fell 64 cents, or 1.6 percent, to $38.38 at 4:15 p.m. in composite trading on the New York Stock Exchange, the biggest drop in the KBW Bank Index of 24 companies.
Cutting Estimates
Operating costs rose 9 percent to $12.9 billion due in part to increased legal bills and a weakening U.S. dollar, Chief Financial Officer John Gerspach told analysts. The annual total will probably exceed the range of between $48 billion and $50 billion previously given by the bank, Gerspach said.
“Higher expenses lead to lower profits,” said Gerard Cassidy, an analyst with Royal Bank of Canada, who has an “outperform” rating on the shares. “Unless they’re able to offset those expenses with greater revenue growth, and management did not say that was going to happen, one can conclude that when analysts make their earnings adjustments, they’re going to be lowering their earnings estimates.”
The bank’s total revenue declined 7 percent to $20.6 billion, compared with JPMorgan’s 7 percent revenue increase to $26.8 billion in the same period.
Revenue Falls
Citicorp revenue, which includes investment banking, trading, the retail bank and global transaction services, fell 1 percent to $16.3 billion. Citi Holdings, which Pandit created in January 2009 to sell troubled businesses and securities, posted an 18 percent decline in revenue, to $4.01 billion.
“While we are comfortable with the broader macro-economic trends that underpin our strategy, we are concerned with the impact the near-term economic environment will have on the industry for the second half of the year,” Pandit told analysts on the conference call. “But with that said, we are consistently profitable and remain focused on growing responsibly.”
Revenue at Citigroup’s investment bank, run by Ray McGuire, increased to $1.09 billion from $674 million in the same quarter last year. Moshe Orenbuch, a Credit Suisse AG analyst, had predicted revenue of $865 million while Richard Staite, a London-based analyst with Atlantic Equities LLC, had estimated $890 million.
McGuire, 54, added more than 40 managing directors this year as Pandit seeks to boost market share. Citigroup doesn’t disclose the investment bank’s profit.
As of 7-15-2011
Shares Drop on Expense Forecast
Citigroup Inc. (C), the third-biggest U.S. bank, said profit rose 24 percent, beating analysts’ estimates on higher investment-banking fees and reductions in loan-loss reserves. The shares declined after the bank said expenses will be higher than previous forecasts.
Second-quarter net income rose to $3.34 billion, or $1.09 a share, from $2.7 billion, or 90 cents, in the same period last year, New York-based Citigroup said today in a statement. The average estimate of 23 analysts surveyed by Bloomberg was for earnings per share of 96 cents.
A 61 percent gain in investment-banking revenue at Citigroup, led by Chief Executive Officer Vikram Pandit, mirrored the results JPMorgan Chase & Co. (JPM) reported yesterday. A $2 billion release from loan-loss reserves also bolstered earnings. The results countered a decline in trading revenue from the first quarter and allowed Pandit to post a sixth straight profitable quarter.
“Investment-banking results, particularly on the trading front, were much better than we expected,” Charles Peabody, an analyst with New York-based Portales Partners LLC, said in an interview on Bloomberg TV. “Their investment banking, which would be mergers and acquisitions and underwriting, was up very strong both quarter over quarter and year over year.”
Citigroup shares declined, erasing an earlier gain, after the company said on a conference call with analysts that expenses would remain elevated through the end of this year. The stock fell 64 cents, or 1.6 percent, to $38.38 at 4:15 p.m. in composite trading on the New York Stock Exchange, the biggest drop in the KBW Bank Index of 24 companies.
Cutting Estimates
Operating costs rose 9 percent to $12.9 billion due in part to increased legal bills and a weakening U.S. dollar, Chief Financial Officer John Gerspach told analysts. The annual total will probably exceed the range of between $48 billion and $50 billion previously given by the bank, Gerspach said.
“Higher expenses lead to lower profits,” said Gerard Cassidy, an analyst with Royal Bank of Canada, who has an “outperform” rating on the shares. “Unless they’re able to offset those expenses with greater revenue growth, and management did not say that was going to happen, one can conclude that when analysts make their earnings adjustments, they’re going to be lowering their earnings estimates.”
The bank’s total revenue declined 7 percent to $20.6 billion, compared with JPMorgan’s 7 percent revenue increase to $26.8 billion in the same period.
Revenue Falls
Citicorp revenue, which includes investment banking, trading, the retail bank and global transaction services, fell 1 percent to $16.3 billion. Citi Holdings, which Pandit created in January 2009 to sell troubled businesses and securities, posted an 18 percent decline in revenue, to $4.01 billion.
“While we are comfortable with the broader macro-economic trends that underpin our strategy, we are concerned with the impact the near-term economic environment will have on the industry for the second half of the year,” Pandit told analysts on the conference call. “But with that said, we are consistently profitable and remain focused on growing responsibly.”
Revenue at Citigroup’s investment bank, run by Ray McGuire, increased to $1.09 billion from $674 million in the same quarter last year. Moshe Orenbuch, a Credit Suisse AG analyst, had predicted revenue of $865 million while Richard Staite, a London-based analyst with Atlantic Equities LLC, had estimated $890 million.
McGuire, 54, added more than 40 managing directors this year as Pandit seeks to boost market share. Citigroup doesn’t disclose the investment bank’s profit.
As of 7-15-2011
My post is for my entertainment, do your own DD before pushing your
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