Citigroup continues to make profits after it needed government assistance in the form of a bailout. This marks the banks second year of consecutive profits. There were tremendous gains in the third quarter of this year – showing a 74 percent increase.
Citigroup reported a profit of $3.8 billion, equaling to $1.23 a share, which was above analysts’ predictions of 81-cent shares. Last year the company reported 72-cent shares and a $2.2 billion profit.
The Citigroup investment-banking sector has suffered some significant setbacks, but it hasn’t taken away from the overall profit of the bank. The bank had a paper gain of almost $2 billion, which changes perception of the bank and it’s level of riskiness. In addition to their investment banking industry, Citigroup claimed that its private-label credit card business needed help, according to the Wall Street journal. But as the numbers the banks reported were profitable, they will continue their private-label credit card operation, which issues retail-branded credit cards.
In a memo to employees, CEO Vikram Pandit explained that the move to the new strategy was “boosted by an improving credit environment and strong management, the business has earned $2.2 billion pre-tax so far this year,” he said. Pandit hopes that the new strategy will strengthen corporate client relationships.
Citigroup is staying profitable in a time when most banks are finding it hard to compete in the banking market. It seems that global expansion and issues in Europe have made it hard for banks to see profits, but despite this Citibank has still remained profitable for seven consecutive quarters.
In a Memo to employees Pandit noted that the company has noticed an increase of 20 percent from the same time last year. Revenues in both the Regional Consumer and the GTS departments increased, while profits in the Securities and Banking arena did not profit so well. The company continued to reduce their holding assets, which now only account for 15 percent of their balance sheet, which is down 20 percent from the beginning of this year.
Pandit continues to assure corporate clients, employees and strategic partners that the company will continue to grow and create new strategies that will benefit those with an invested interest. The company also assures that will make sure to remain careful about their risk.
Like the majority of banking institutions they have come under scrutiny from investors for their inability to grow due to rising costs and slim profits due to many banking legislations such as the Credit CARD Act of 2009.
