Citigroup Inc earned US$1.14 billion in the second quarter, 73 percent lower than a year ago because of a mammoth class-action settlement with WorldCom investors that took a heavy toll on the big bank's profits.
The nation's largest financial institution reported Thursday that its earnings equated to US$0.22 a share for the April-June quarter, down sharply from US$4.30 billion, and US$0.83 a share, a year ago.
Citigroup in May agreed to a US$2.65 billion settlement with investors in WorldCom Inc, the disgraced telecommunications giant that was backed by Citi and other banks.
The agreement is one of the largest securities fraud settlements ever. WorldCom continues to do business but has changed its name to MCI Inc.
The settlement covered allegations of misconduct by Citi and its investment divisions as well as a former telecoms analyst. Citi has since reorganized its investment divisions to segregate analysis from investment banking operations.
Despite the settlement's effect on its earnings, Citigroup's performance was somewhat better than analysts had expected.
Excluding charges, and an after-tax gain for sale of a stake in Samba Financial Group, the company said it would have earned US$1.02 a share, higher than the US$0.97 a share forecast by analysts surveyed by Thomson First Call.
Through the first six months of the year, Citigroup said it has earned US$6.42 billion, or US$1.23 a share, down from US$8.40 billion, or US$1.62 a share, during the first half of last year.
The company said that deal, along with ongoing plans to sell its stake in Fubon Financial Holding Co (
Citigroup's revenues increased to US$22.30 billion for the quarter, a 15 percent gain from the US$19.35 billion it took in a year ago.
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