Citigroup’s 2Q Profit Misses Estimates

NEW YORK – Citigroup Inc., the nation’s largest financial institution, reported second-quarter profits below Wall Street’s expectations Monday as a result of what CEO Charles Prince called “challenging conditions,” including a tough bond market and an interest rate squeeze.

The New York-based bank earned $5.07 billion in the April-June period, or 97 cents per share, up from $1.14 billion, or 22 cents per share, a year earlier. The year-earlier period included a gain on the sale of Citigroup’s stake in the Saudi Arabia-based Samba Financial Group as well as a nearly $5 billion charge for the bank’s settlement of WorldCom Inc. litigation.

Earnings from continuing operations rose to $4.73 billion, or 91 cents per share, from $916 million, or 17 cents per share, a year earlier.

Revenue amounted to $20.17 billion in the second quarter, down from $20.86 billion.

Analysts expected Citigroup to earn $1.02 per share on revenue of $21.41 billion, according to a Thomson Financial survey.

Citigroup shares were off 99 cents or 2 percent at $45.43 in pre-market trading activity on the New York Stock Exchange.

Prince, in a statement accompanying the report, said “our business faced challenging conditions during the quarter.”

He added: “The capital markets environment was one of the worst we have seen in years, and combined with a flattening yield curve, led to a significant decline in our fixed income markets revenues.”

Prince said the nation’s new, tougher bankruptcy law, which goes into effect this fall, “caused a short-term spike in bankruptcy filings” in advance of the implementation date. This, he said, added about $175 million in losses to the bank’s North American card operations.

Citigroup’s global consumer group reported revenue of $12 billion for the second quarter, down 2 percent from $12.2 billion a year earlier. Net income in the division was $2.9 billion, down 7 percent from $3.1 billion a year earlier.

In corporate and investment banking, revenues were $5.16 billion, down 15 percent from $6.07 billion a year earlier. Net income was $1.37 billion, compared with a $2.8 billion loss a year earlier because of the special items.

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