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Archive for Monday, October 17, 2011

Citigroup earnings rise 74 percent, to $3.8 billion

October 17, 2011

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— Citigroup Inc.’s earnings rose 74 percent in the third quarter as more of its customers paid their bills on time, leading to lower losses from loans. An accounting gain also boosted income.

It was the seventh straight quarter of income growth for Citi, the nation’s third-largest bank by assets. Citigroup was one of the biggest recipients of taxpayer support during the financial crisis. It received $45 billion in bailouts funds and was partly owned by the government until December 2010.

The New York bank’s net income rose 74 percent, to $3.8 billion, due to lower losses from loans and an accounting gain related to the valuation of the bank’s own debt. Citi’s stock fell 1.7 percent to close at $27.93, less than other banks stocks.

The profit report came as the Occupy Wall Street movement entered its second month and spread across the country, targeting large financial institutions like Citi. As of Monday, the bank said it had not yet been approached by organizers of the protest following an offer last week from Citigroup’s CEO, Vikram Pandit, to meet with them.

Occupy Wall Street rallies started last month in New York with protests against income inequality and demands for higher taxes on the wealthy. CEOs like Pandit are prime targets. On Saturday, two dozen people were arrested after they entered a Citibank branch in New York and refused to leave.

Banks like Citi have benefited as Americans have improved their financial health, saving more and paying off their credit card debt on time. Citi’s losses from bad loans fell 41 percent during the quarter to $4.5 billion as defaults fell on Citi-branded cards. That allowed Citi to add $1.4 billion to its earnings from credit reserves it had set aside earlier in anticipation of deeper losses.

However, the bank’s ability to collect fees from raising interest rates on loans or from fees for late payments has decreased because of new regulations. That led to a 9 percent drop in revenue at its North American consumer business. Rival Wells Fargo & Co., which also released its results Monday, took a similar hit to its credit card fee income due to new banking rules.

Citi said a new regulation has also changed its plans for its private-label credit card unit, which issues cards in partnership with retail stores. Citi had said it was planning to either sell or reduce the size of the unit. The bank reversed course after noticing that customers are using retailer-issued cards more. Pandit said in an internal memo to employees the business earned $2.2 billion so far this year as delinquencies declined.

Comments

Richard Heckler 2 years, 6 months ago

More fraud: The problem is "once the money left the building, the government(Bush Admin) lost all track of it.

The beginning banks, the first nine, the big banks, they all got their money one day after a meeting with Henry Paulson, in which he told them, “You’re taking this money.” But after that, the process was much more convoluted. And some banks lobbied for the money. Others banks didn’t lobby for the money but were told they were taking it. It all — what we basically concluded early on, that there was really no plan to this at all. While Treasury said that the purpose was to get credit flowing back into the system, the fact of the matter is, the way they went about this made no sense at all.

There were just a handful of institutions that were terribly weakened. AIG the insurer, Bank of America, Citigroup, those three were clearly in very weakened form. So, many of the other big banks were not." http://www.democracynow.org/2009/9/10/good_billions_after_bad_one_year

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deec 2 years, 6 months ago

It's lovely that we bailed out the con men at Citi over and over again. They'll pay $258 million in fines for this scam, but only earned $160 million on it. Of course, if they hadn't got caught, that $160 million would be profit. http://www.bbc.co.uk/news/business-15375111

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Agnostick 2 years, 6 months ago

"On June 1, 2009, it was announced that Citigroup Inc. would be removed from the Dow Jones Industrial Average effective June 8, 2009, due to significant government ownership. Citigroup Inc. was replaced by Travelers Co.

"Return to profitability, non-governmental shareholder ownership

"In 2010, Citigroup achieved its first profitable year since 2007. It reported $10.6 billion in net profit, compared with a $1.6 billion loss in 2009. Late in 2010, the government sold its remaining stock holding in the company, yielding an overall net profit to taxpayers of $12 billion."


Source: http://en.wikipedia.org/wiki/Citigrou...

Visit the link; the above quote is peppered with several references, links to other reports, etc. Wikipedia is not meant to be the singular, perfect source--just a starting place to guide you to deeper resources.

Agnostick agnostick@excite.com

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Agnostick 2 years, 6 months ago

Quote:


"Federal assistance

"Over the past several decades, the United States government has engineered at least four different rescues of the institution now known as Citigroup. During the most recent tax-payer funded rescue, by November 2008, Citigroup was insolvent, despite its receipt of $25 billion in federal TARP funds, and on November 17, 2008, Citigroup announced plans for about 52,000 new job cuts, on top of 23,000 cuts already made during 2008 in a huge job cull resulting from four quarters of consecutive losses and reports that it was unlikely to be in profit again before 2010. On the same day, Wall Street responded by dropping its stock market value to $6 billion, down from $300 billion two years prior. As a result, Citigroup and Federal regulators negotiated a plan to stabilize the company and forestall a further deterioration in the company's value. The arrangement calls for the government to back about $306 billion in loans and securities and directly invest about $20 billion in the company. The assets remain on Citigroup's balance sheet; the technical term for this arrangement is ring fencing. In a New York Times op-ed, Michael Lewis And David Einhorn described the $306 billion guarantee as "an undisguised gift" without any real crisis motivating it. The plan was approved late in the evening on November 23, 2008. A joint statement by the US Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp announced: "With these transactions, the U.S. government is taking the actions necessary to strengthen the financial system and protect U.S. taxpayers and the U.S. economy."

"Citigroup in late 2008 held $20 billion of mortgage-linked securities, most of which have been marked down to between 21 cents and 41 cents on the dollar, and has billions of dollars of buyout and corporate loans. It faces potential massive losses on auto, mortgage and credit card loans if the economy worsens.[citation needed] [This paragraph requires a reference, particularly to the $20 billion figure quoted above. It is likely that this number is a severe underestimate of the value of CDO holdings held in off-balance sheet SIVs.]

"On January 16, 2009, Citigroup announced its intention to reorganize itself into two operating units: Citicorp for its retail and institutional client business, and Citi Holdings for its brokerage and asset management. Citigroup will continue to operate as a single company for the time being, but Citi Holdings managers will be tasked to "tak[e] advantage of value-enhancing disposition and combination opportunities as they emerge", and eventual spin-offs or mergers involving either operating unit have not been ruled out. On February 27, 2009 Citigroup announced that the United States government would be taking a 36% equity stake in the company by converting $25 billion in emergency aid into common shares.

"Citigroup shares dropped 40% on the news.

[more]

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its_just_math 2 years, 6 months ago

Pay your monthly balance every month. If you can't, you have no business having the card. It's just easier to use a cc vs. always having cash or writing a check. The miles you can get on some of these cards----or points---can really stack up quick too. I don't know how many free first class tickets my wife and I have cashed in over the years.

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FalseHopeNoChange 2 years, 6 months ago

Voevoda says: "I don't have a lot of sympathy for greedy people."

You must not like the people in government. I don't like people demanding that I give my hard earned money to them. Government peoples excuses for taking it is appalling. Hateful even. Occupy!! Stop the takers! Eat the rich government people!!

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voevoda 2 years, 6 months ago

Citigroup isn't evil, but with all their profits, they are in an ideal position to give to charities that help the poor. The corporation can give, and so can its executives individually. If they do what Bill Gates does, then they won't be identified as greedy. And at the same time, they can cut their tax obligations, too.
If they don't want to pay taxes and they don't want to give to charity, then they are plain greedy. I don't have a lot of sympathy for greedy people.

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Mike Gerhardt 2 years, 6 months ago

Unfortunately, I am sure that some poster here will write that CITIGROUP is an evil corporation that must be stripped of its earnings.

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