Citigroup Sees Rise in Second Quarter Profits

[Aug 6, 2007.]

 

Citigroup Inc. is reporting an 18 percent jump in its second-quarter profit.

Meanwhile, one of Citigroup's leading competitors, Wachovia Corp., also saw a significant fattening of its profit margin, as did Bank of America Corp. and JP Morgan Chase & Co. Still, against the backdrop of a difficult credit picture, some financial institutions are also seeing declines in stock shares. As a result, investors remain leery of the banking sector as a whole.

Net income at Citigroup increased to $6.23 billion in the second quarter, up from $5.27 billion during the April through June period of last year. Meanwhile, revenue at Citigroup rose 20%, reaching $26.63 billion. That's a significant jump over last year's total of $22.18 billion.

Financial experts fear that Citigroup and other banks could sustain losses if the credit situation crumbles. Still, analysts are giving high marks to Citigroup for its wealth management techniques. Citigroup's Chief Executive Officer, Charles Prince, told analysts, "Credit was a drag on our bottom-line results."

Consume credit problems are expected to worsen during the remainder of 2007. Delinquencies in second mortgages have been on the rise, increasing fears of a national credit crunch. In response, Citigroup has already cut its subprime mortgage holdings in half. Still, Citigroup officials consider the international credit situation to be quite encouraging.

A significant increase in loan delinquencies could ultimately darken the profit picture for numerous banks. However, revenue from consumer lending at Citigroup actually grew in the second quarter. Meanwhile, Citigroup's revenue from the markets and banking section rose more than 30%, climbing to nearly 9 billion dollars.

Citigroup was also in a growth mode during the second quarter, opening or buying 160 retail or consumer branches. A large percentage of those branches are actually located overseas.

Julie Ann Amos
August 6th 2007

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