Wrap Up of Banks’ First Quarter Results
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Citigroup delivered another quarter of devastating results, losing more than $5 billion due to troubles in its fixed-income business and higher consumer credit costs, adding it would cut an additional 9,000 jobs.
The New York-based company also recorded more than $15 billion in writedowns, with the lion’s share coming from subprime-related direct exposures. But investors cheered the news, sending shares of Citigroup more than 6% in early trading, as the results were not as bad as some had feared.
Citi, however, did surprise analysts by delivering better-than-expected top line growth. The company said revenue rose sharply to $13.22 billion from the previous quarter, still it remained at just about half of what it was a year ago.
At the same time, Friday’s results paled in comparison to the eye-popping $9.83 billion quarterly loss the company suffered three months ago - the worst ever recorded in the 196-year history of the firm and its predecessors.
Citigroup CEO Vikram Pandit said he was not happy about the results, but noted that he believed that efforts to cut costs, sell non-core businesses and beef up risk management would pay off.
“I think you will see we are taking all the action you’d want us to take to maximize the value of this franchise,” said Pandit.
Since Pandit’s ascension to the CEO post in December, management has made great strides in shaping up what some critics have called the company’s bloated corporate structure.
On Thursday, Citi announced it would sell its commercial lending and leasing business to General Electric for an undisclosed amount. The company has also announced other major moves including the sale of Diners Club International and its stake in Brazilian credit card company Redecard SA.
Citigroup’s results wrap up what has been a particularly tough week of results for the nation’s largest financial firms. Merrill Lynch recorded a loss of $1.96 billion, after about $6.6 billion in new writedowns. The company also said it planned to cut about 3,000 more jobs.
Wachovia Corp. surprised Wall Street Monday with a first-quarter loss of $350 million, while Washington Mutual reported a loss of $1.1 billion, or $1.40 a share, on Tuesday. JPMorgan Chase topped Wall Street expectations after reporting earnings of $2.4 billion. Still the results were just half of what they were a year ago.
