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Citigroup Third-Quarter Profit Rises 27%, Beating Estimates

October 18, 2000|From Reuters and Bloomberg News

Citigroup Inc. the No. 1 U.S. financial services company, said Tuesday that its third-quarter profit rose a better-than-expected 27%, driven by fees from advising on mergers and growth in its vast consumer banking arm.

Major banking companies Wells Fargo & Co. and FleetBoston Financial Corp., meanwhile, reported earnings in line with expectations for the latest quarter, buoyed by securities trading and investment banking.

New York-based Citigroup, which runs banking, insurance and brokerage operations in more than 100 countries, said its earnings increased to $3.09 billion, or 67 cents a share, in the quarter ended Sept. 30, from $2.44 billion, or 52 cents, a year ago. Wall Street had expected 65 cents.

Citicorp's latest results include a $15-million charge and $8 million in accelerated depreciation, while last year's figures incorporated a $31-million charge, a credit for the reversal of $41 million in previous charges and $25 million in accelerated depreciation.

Revenue rose 15% to $16.8 billion, as its Salomon Smith Barney securities unit raked in record fees from advising on corporate merger deals, its corporate and consumer banking operations in far-flung emerging markets flourished, its global credit card business improved and the company had gains on the sale of Latin American bonds.

Like other banking companies, Citigroup said it expects nonperforming commercial assets, or corporate loans with possible repayment problems, to rise as higher U.S. interest rates squeeze borrowers. But Sanford "Sandy" Weill, Citigroup's chairman and chief executive, said he was not worried.

"We think our present position is a good one," Weill told reporters on a conference call.

Wells Fargo said its earnings rose 11% to $1.07 billion, or 64 cents a share, because of investments and loan growth.

As the largest bank headquartered in the West, Wells continued to benefit from the region's economic boom, particularly in California.

Still, the bank's loan losses climbed, but Wells said its volume of problem assets remained at below-normal levels. Wells charged off $267 million in loans in the latest quarter, up 9% from a year ago.

Wells said that loan losses probably would continue to rise in the next few months, but only by a small amount.

FleetBoston said third-quarter profit rose 10% to $782 million, or 84 cents a share, on higher merger advisory fees, brokerage commissions and trading revenue. Revenue rose 5.3% to $3.59 billion, led by a 59% jump in revenue at the Robertson Stephens and the Quick & Reilly units.

At a Glance

Other financial-sector earnings, excluding one-time gains or charges unless noted, include:

* Associates First Capital Corp., the biggest U.S. consumer finance company, said third-quarter profit rose 14% to $442.4 million, or 61 cents a share, as revenue rose 17% to $3.88 billion.

* Bank One Corp.'s profit slid 37% to $581 million, or 50 cents a share, matching forecasts, as the company contends with problems at its large credit card arm and guards against loan losses. Net income at the First USA Inc. credit card unit fell 39%.

* Charles Schwab Corp. said third-quarter operating income rose 15% to $166 million, or 12 cents a share, meeting expectations, as trading commissions and asset management fees increased. Revenue grew 30% to $1.32 billion.

* Jefferies Group Inc. said third-quarter earnings from continuing operations increased 67% to $14.7 million, or 60 cents a share, as revenue rose 36% to $198.3 million.

* Merrill Lynch & Co. said earnings jumped 53% to $885 million, or 94 cents a share, in the third quarter, well beyond the 86 cents analysts expected, helped by the investment firm's strong global underwriting presence and lower operating expenses. Revenue grew 15% to $6.1 billion.

* Washington Mutual Inc., the largest U.S. savings and loan, said third-quarter profit fell 3.7% to $452.5 million, or 86 cents a share, as costs rose. The results beat forecasts by a penny.

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