Citigroup profit beats analysts' estimates

Citigroup Inc, the third-biggest US bank, said profit rose 24 per cent, beating analysts’ estimates on higher investment-banking fees and fewer losses tied to troubled assets.

Second-quarter net income was $3.34 billion, or $1.09 a share, compared with $2.7 billion, or 90 cents, in the same period last year, New York-based Citigroup said today in a statement. The average estimate of 23 analysts surveyed by Bloomberg was for earnings per share of 96 cents.

A 61 per cent gain in investment-banking revenue at Citigroup, led by Chief Executive Officer Vikram Pandit, 54, mirrored the results JPMorgan Chase & Co reported yesterday. Losses fell at Citi Holdings, the unit that includes distressed assets Pandit wants to sell. The results countered a decline in trading revenue from the first quarter and allowed Pandit to post a sixth straight profitable quarter.

“The momentum has shifted away from losses and to small incremental gains,” said Michael Yoshikami, CEO and founder of YCMNet Advisors, which manages $1.1 billion including Citigroup shares. “This is the beginning of laying a foundation for the long-term for Citigroup to actually be a profitable company again on a consistent basis,” Yoshikami said before results were released.

JPMorgan, the second-largest US bank by assets behind Bank of America Corp, yesterday reported a $5.43-billion profit, or $1.27 a share, 6 cents higher than the average estimate of analysts surveyed by Bloomberg.

The firm’s investment bank, led by James Staley, increased revenue 37 per cent to $1.9 billion.

BANK OF AMERICA
Bank of America may report a profit of $3.08 billion excluding mortgage-related costs on July 19, the Bloomberg survey shows. Wells Fargo & Co, the largest mortgage lender, may say it earned $3.75 billion when it announces results the same day.

Citigroup’s investment-banking unit advised on completed deals worth $98.8 billion in the quarter, almost quadruple volume for the same period last year.

Overall deal volume increased 45 per cent to $579.3 billion, according to data compiled by Bloomberg.

Citigroup also rose to fourth from eighth among global corporate bond underwriters.

The lender remained the fourth-biggest underwriter of emerging market bonds in the quarter, as it handled the sale of $8.04 billion of debt, compared with $6.41 billion last year. Pandit said on March 9 that Citigroup gets more than half its profit from emerging markets. Clients during the quarter included Banco Bradesco SA, Brazil’s second-biggest bank by market value, and PT Pertamina, Indonesia’s state oil company.

The bank also rose to sixth from eighth among underwriters of global equities, managing the sale of $10 billion in shares including the initial public offering for Glencore International Plc, the Baar, Switzerland-based commodities trader. Citigroup underwrote $4.88 billion in the same quarter in 2010.