Citi profit falls, hurt by $7 billion legal settlement
By David Henry and Tanya Agrawal
(Reuters) - Citigroup Inc C.N said on Monday that quarterly earnings fell 96 percent, hurt largely by a $7 billion mortgage settlement, but also by declining income in most of its main businesses including stock trading and retail banking.
There were bright spots in the results, including better- than-expected stock and bond trading results, which helped the bank post adjusted earnings that beat the average analyst estimate. Citigroup shares rose 3.7 percent to $48.74.
While the trading results topped expectations, revenue from stock and bond trading declined. And profit for Citigroup's main businesses, known as Citicorp, fell 23 percent in the second quarter, as revenue slid 8 percent and expenses rose 4 percent.
The results underscored how much work Chief Executive Officer Michael Corbat still has to do to fix the third largest U.S. bank, which has been struggling to contain its costs for more than a decade.
Net income to common shareholders totaled $80 million, or 3 cents a share, compared with $4.09 billion, or $1.34 a share, in the same quarter last year.
Excluding the bank's $7 billion settlement with the U.S. government as well as accounting adjustments to trading results that reflected the changing market value of the bank's debt, Citi posted earnings of $1.24 per share. That compared with the average analyst estimate of $1.05 a share, according to Thomson Reuters I/B/E/S.
The bank's settlement with the U.S. government over shoddy mortgages resulted in a $3.8 billion charge, before taxes.