Citigroup Inc, the US' largest financial institution, reported second-quarter profits below Wall Street's expectations yesterday as a result of what CEO Charles Prince called "challenging conditions," including a tough bond market and an interest rate squeeze.
The New York-based bank earned US$5.07 billion in the April-June period, or US$0.97 per share, up from US$1.14 billion, or US$0.22 per share, a year earlier. The year-earlier period included a gain on the sale of Citigroup's stake in the Saudi Arabia-based Samba Financial Group as well as a nearly US$5 billion charge for the bank's settlement of WorldCom Inc litigation.
Earnings from operations rose to US$4.73 billion, or US$0.91 per share, from US$916 million, or US$0.17 per share, a year earlier.
Revenue amounted to US$20.17 billion in the second quarter, down from US$20.86 billion.
Analysts expected Citigroup to earn US$1.02 per share on revenue of US$21.41 billion, according to a Thomson Financial survey.
Prince, in a statement accompanying the report, said: "The capital markets environment was one of the worst we have seen in years, and combined with a flattening yield curve, led to a significant decline in our fixed income markets revenues."
Prince said the US' new, tougher bankruptcy law, which goes into effect this fall, "caused a short-term spike in bankruptcy filings" in advance of the implementation date.
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