Citigroup Inc (NYSE: C), one of the worst-hit banks during the financial crisis, reported a third consecutive quarterly profit as loan defaults slowed.
The third-largest bank by assets became the second major bank after JPMorgan Chase & Co., which reported a profit by dipping into funds set aside to cover bad loans.
Banks are confident that their customers will continue to make payments on mortgage debt and credit cards. In generally, there were 19 percent fewer consumers who were late by around 90 days on payments on credit cards.
The bank swung to a third-quarter profit of nearly $ 2.2 billion. It earned $ 2.6 billion, excluding an $ 800 million pre-tax loss on the sale of its student lending operations. The profit came after it took back $ 1.97 billion which had been previously set aside for bad loans.
The bank has made a recovery from the worst of the losses which forced it to take three bailouts in 2008 and 2009. It received $ 45 billion in government aid. $ 25 billion given in October were converted to stock and additional $ 20 billion in Troubled Asset Relief Program funds were provided by the Treasury.
The bank gave Washington $ 27 billion of warrants and preferred shares in exchange of 90% cover of The Federal Reserve, The Federal Deposit Insurance Corporation, and Troubled Asset Relief Program.
At present, the government owns 12 percent and continues to reduce its ownership in Citigroup. It aims to sell off the whole stake by December.
According to Citi\’s CEO Vikram Pandit, the company had put in place all the elements for continued profitability.
Although the bank saw improvement in its bottom line, its revenue still fell due to decline in borrowings. Citi gained revenues of $ 20.74 billion, 6% less than that of second quarter and 2% less than the period year-on-year. Losses from bad loans declined 30 percent during the quarter.
Growth of revenues from emerging markets helped the bank offset decline in revenues from North America and Europe.
Citi\’s shares surged 5.6 percent to $ 4.17.
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