Citigroup Inc. provided more evidence that the nation's big banks may have turned a corner, reporting a surprise first-quarter profit Monday as trading revenue offset losses from failed loans.
Citigroup said it earned $4.4 billion after payment of preferred dividends, compared with a loss of $696 million a year earlier. That was the bank's biggest quarterly profit since the second quarter of 2007.
The company cited strong trading of bonds, equities and other securities for its big profit. Citigroup, one of the hardest hit banks during the credit crisis and recession, said loan losses fell for the third consecutive quarter. The amount of money it set aside for loan losses also fell.
Citigroup earned 15 cents per share on revenue of $25.4 billion. That easily beating analysts expectations of a slight loss, according to Thomson Reuters.
The bank's stock was down about 1 percent in pre-opening trading. It joined other financial stocks that extended a pullback in response to news that the government was charging Goldman Sachs Group Inc. with civil fraud for mortgage-related transactions.
Citigroup said its total reserves to cover losses from bad loans fell 22 percent, or $2.4 billion, from the fourth quarter to its lowest level in two years. The company said its credit losses fell 15 percent to $8.4 billion from almost $10 billion in the fourth quarter. Citigroup reported improvement across nearly all its loan portfolios.
The company reported $8 billion in securities and banking operations, which includes its trading business. That was up $4.7 billion from the fourth quarter.
Citigroup's stock has been rising lately following the government's announcement last month that it would start selling the 27 percent stake in the bank it acquired as part of its bailout of the bank during the credit crisis.
The sale by the government will end the last remaining ties Citi has to the Troubled Asset Relief Program. Citi received a total of $45 billion from the government during the credit crisis. It repaid $20 billion in December and the remaining $25 billion was converted into the minority stake the government is now selling.
"All of us at Citi recognize that we would not be where we are without the assistance of American taxpayers," Citigroup CEO Vikram Pandit said after reporting the bank's surprise profit.
Citi's strong showing follows similarly impressive results last week by Bank of America Corp. and JPMorgan Chase & Co. That has boosted hopes that the worst of the credit crisis has passed and banks may be entering a period of sustained profitiability.
Yet Pandit sought to dampen short-term expectations for Citi, saying the bank remained cautious "given the uncertain economic recovery and high unemployment in the U.S."
"Realistically, we do not expect our performance to follow an invariable trend-line upward," he said. "Longer-term, however, the prospects for Citi are clear and bright."
© Copyright 2022 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.