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Citigroup Profit Rises on Banking and Credit

Net income climbs 20% from a year earlier, but some are disappointed by quarter-over-quarter revenue growth.

October 21, 2003|From Reuters

Citigroup Inc. on Monday said third-quarter profit rose 20%, driven by higher investment banking, retail banking and credit card income, and fewer loan defaults.

New York-based Citigroup, the world's largest financial services company, with $1.21 trillion of assets, said net income rose to $4.69 billion, or 90 cents a share, from $3.92 billion, or 76 cents, a year earlier.

Analysts polled by Reuters on average forecast 85 cents a share.

But analysts called Citigroup's revenue growth disappointing.

Revenue rose 10% to $19.4 billion from the year-earlier period, but was up just 0.2% from the second quarter.

Glenn Schorr, a UBS Investment Research analyst who rates Citigroup's stock a "buy," called the quarter a "mixed bag."

"It's difficult for us to be too thrilled with the numbers as revenues were flat," Schorr wrote.

Expenses rose 14% from a year earlier to $9.6 billion as Citigroup expensed stock options, spent more on technology, increased pension costs and paid its bankers more.

Citigroup's stock fell 24 cents to $48.14 on the New York Stock Exchange. For the year, Citigroup is up 37%.

Other banks also have reported higher profits as stocks rose and investment banking revenues grew.

Profit outside the United States rose 29% to $1.23 billion, helped by a weak U.S. dollar. Citigroup, meanwhile, set aside $1.61 billion to cover bad loans. That provision for credit losses was down 40%.

The quarter ended legendary Wall Street deal maker Sanford "Sandy" Weill's five years as chief executive, though the 70-year-old remains chairman.

On Oct. 1, Charles Prince, 53, Weill's longtime confidant who was head of corporate and investment banking, became chief executive, and consumer bank chief Robert Willumstad, 58, became chief operating officer.

Profit in Citigroup's global consumer business rose 14% to $2.52 billion, even as consumer finance income fell 13% to $467 million, hurt by Japan.

Retail banking income rose 26% to $1.09 billion, and credit card income rose 16% to $985 million.

Citigroup bought Home Depot Inc.'s credit card portfolio in the quarter, and has received regulatory approval to buy Sears, Roebuck & Co.'s card business.

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