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Citigroup Reports 36% Profit Jump

Banking: Increased consumer borrowing in fourth quarter offsets write-offs for Enron, Argentina losses.

January 18, 2002|GEORGE STEIN | BLOOMBERG NEWS

NEW YORK — Citigroup Inc., the largest financial services firm, said fourth-quarter profit rose 36% as lending to consumers surged. The company wrote off $698 million for Enron Corp.'s collapse and Argentina's default.

Net income rose to $3.88 billion, or 74 cents a share, from $2.84 billion, or 55 cents, a year earlier. Revenue rose 12% to $22 billion.

The lowest interest rates in 40years spurred a 20% rise in revenue in the global consumer unit and sliced the bank's cost of funds. Profit in the division, run by Robert Willumstad, rose 20% to $2 billion. Citigroup expenses fell as it shed 12,000 jobs in 2001.

"The consumer business saved the day," said Jay Willadsen, who helps manage $22 billion at Independence Investment in Boston, including Citigroup shares.

Chief Executive Sanford Weill said profit from Citigroup's consumer group probably will rise by a "mid-double-digit" percentage in 2002. On Tuesday, he named Willumstad Citigroup's president.

Earnings at investment bank Salomon Smith Barney rose 17% to $701 million. Rivals Morgan Stanley Dean Witter & Co., Goldman Sachs Group Inc. and Lehman Bros. Holdings Inc. all reported lower profit for the quarter.

Citigroup shares rose $1.20 to close at $49.90 on the New York Stock Exchange.

Fourth-quarter net income was more than double the $1.69 billion that J.P. Morgan Chase & Co., its closest banking rival, reported Wednesday for all of 2001. Citigroup earned $14.1 billion in the year, 4% more than in 2000. Revenue for 2001 was $83.6 billion, up 8% from 2000.

Enron cost Citigroup $228 million before taxes in the period as it wrote off loans and trading positions. Economic difficulties in Argentina cost the bank an additional $470 million.

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