Boston, MA 07/14/2014 (wallstreetpr) – Citigroup Inc (NYSE:C) said its 2Q2014 profits dropped 96 percent on a year-over-year basis thanks to a charge related to the mortgage settlement with the U.S. Justice Department.
Although the bank reported weaker results for the quarter, its shares rose in early trading because of it managed to beat Wall Street consensus estimates for the quarter. Furthermore, the company succeeded to convince investors about its ability to turnaround while shedding settlement burden.
2Q at a glance
Citigroup Inc (NYSE:C) reported a profit of $181 million in 2Q, suggesting a profit of $0.03 per share. That compared with $4.18 billion or $1.34 per share earned in the same quarter a year earlier. Without the legal charge and accounting adjustments, the bank earned $1.24, beating the consensus estimate of $1.05 per share.
On the revenue front, the bank registered 5.6 percent decline in revenue to $19.34 billion. Wall Street expected revenue in the neighborhood of $18.93 billion.
Investors have been patient with Citigroup Inc (NYSE:C) as they hope CEO Michael Corbat will be able to turnaround the company, at least to the point of being able to raise dividend and buyback program. The Federal Reserve denied the bank an opportunity to raise the dividend or expand shares repurchase program. They cited the bank’s risk management problems.
2Q surprise
Citigroup Inc (NYSE:C) was able to earn a rare profit from some of the businesses that it has booked for sale. Citi Holdings that contributed a loss of more than $590 million last year showed a different performance in the latest quarter. It contributed $244 million in profit. That was the first time that the unit returned a profit.
In the other segments, the bank noted encouraging performance in its investment banking where revenue was up 16 percent from the same period last year and 27 percent sequentially.
Citigroup Inc (NYSE:C) also benefited to 15 percent decline in its cost of credit in 2Q compared to the same quarter last year.
Finally, Citigroup Inc (NYSE:C) officially announce $7 billion settlement with the Justice Department over shoddy mortgages that it sold to investors.
