Citigroup first-quarter profit fell 32 per cent as the bank lost less money on bad loans but struggled to grow it business.
The third-largest US bank, which employs up to 2,000 staff in the Republic, said today it earned $3.0 billion, or 10 cents per share. That compared with $4.4 billion, or 15 cents per share, a year earlier.
The numbers look OK relative to expectations, but it's a tough slog. I think the tepid loan growth is just confirmation of the expectations people have," said Michael Holland, chairman of money-manager Holland & Co.
Analysts on average had expected the bank to report first-quarter profit of 9 cents per share, according to Thomson Reuters.
Citigroup shares rose 1.1 per cent to $4.47 in premarket trading in the US.
It is the fifth consecutive quarterly profit for Citigroup, which is slowly recovering after taking $45 billion in US bailouts during the financial crisis.
By the end of 2010, the government had shed its common shares in Citigroup, and the bank reported its first annual profit since 2007.
Like other big US banks JPMorgan, Chase & Co and Bank of America, Citigroup is struggling to grow its revenues in a volatile trading environment and amid weak consumer demand for new loans.
Citigroup is slowly climbing out of the massive hole it dug for itself in the run-up to the financial crisis. In January, the bank posted net income of $10.6 billion for 2010, its first annual profit since 2007.
In March, the bank announced a reverse-stock split, which will reduce the number of shares it has outstanding, and reinstated a nominal dividend. The government has shed all of the Citigroup common shares it acquired over the course of three rescues of the bank.
Now, chief executive Vikram Pandit has to prove that Citigroup can move past recovery to growth, despite broad challenges facing the banking industry's attempts to boost profits.
Larger rivals JPMorgan Chase & Co and Bank of America Corp both struggled with shrinking loan books and falling revenue as they reported quarterly results last week. Both banks powered their profits largely by releasing reserves they had set aside for bad loans.
Citigroup's investment banking revenue may also be hurt by a weak trading environment. The stock market during the quarter sagged on Middle Eastern political upheaval, a Japanese earthquake and tsunami that sent the yen to record highs, and markets that were broadly unpredictable.
JPMorgan Chase's bond trading unit performed better than expected last week. But Bank of America's bond trading revenues slumped almost 35 per cent from a year earlier, dampening investor hopes that other investment banks would follow JPMorgan Chase's lead.
Citigroup's shares closed down 0.23 percent at $4.42 on Friday. They have lost about 7 per cent since the beginning of 2011.
The bank plans to boost its share price to about $45 - and drastically cut the number of shares it has outstanding - with a 1-for-10 reverse stock split scheduled for early May.
Reuters