October 15, 2009
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News: CitiGroup Profits, CC Defaults on the Rise
Third quarter was a tuff one for CitiGroup after following two quarters of increased profits. Despite the fact that the giant credit card company increased revenues from same time last year, the bank suffered $8 billion in losses. On Wednesday, the banking and credit card giant released third quarter financials showing an operations profit of $101 million on an $851 million gain in securities trading. Although revenue increased 25% to $20.4 billion up from $16.25 billion, stockholder's lost 34 cents from same time a year ago coming in at 27 cents a share or $3.2 billion. Both numbers were slightly higher than the Thomson Reuter's survey forecast earlier this quarter of a 38 cent loss on flat $20 billion. Its strong showing in securities exchange offset the company's high credit card and loan defaults. These numbers drove CitiGroup to add another $802 million to its bad debt reserves.
CitiGroup separated businesses the company plans on selling from those that will receive continued focus on growing and developing. Its core business experienced a $2.2 billion profit for third quarter while the second segment realized a $1.9 billion loss. The second segment consists of those businesses the CitiGroup plans on selling and includes poor performing businesses and co-branded credit card, mortgages, and consumer loan portfolios. Vikram S. Pandit, Chief Executive Officer for the credit card and banking giant, was confident that strategic action and implementation of key security exchanges has provided Citigroup with a “strong foundation.”
CitiGroup has not yet paid back the $45 billion intake of taxpayers' money which it received from the Federal bailout program earlier this year. In its Troubled Asset Relief Program (TARP), the government purchased 34% of Citigroup's credit card and bank assets and equity. In its report, Pandit noted that the company's focus will be on executing its plan and nourishing profits.