Citigroup, Bank of America report first-quarter earnings

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Posted 7:52AM on Tuesday, April 16, 2002

NEW YORK - Profits rose at Citigroup Inc. in the first quarter but came in below analysts' expectations due to large write-offs of the bank's Argentine holdings. Meanwhile, Bank of America Corp., headquartered in Charlotte, N.C., said its first-quarter profits rose 16.5 percent, thanks in part to a flood of mortgages. That beat analysts' predictions. Citigroup Citigroup, the nation's largest bank, said net income totaled $4.84 billion, or 93 cents a share, in the January-March period, up from $3.54 billion, or 69 cents a share, a year earlier. Excluding a number of special items - including a gain from the initial public offering of Travelers Property Casualty Corp. stock and losses from the bank's Argentine holdings - the company earned $3.86 billion, or 74 cents a share. That compared with year-earlier earnings of $3.66 billion, or 71 cents a share. Analysts surveyed by Thomson Financial/First Call had expected Citigroup, the nation's largest bank, to report earnings, excluding special items, of 78 cents a share. In morning trading, Citigroup shares fell $1.09 to $46.01 on the New York Stock Exchange. Merrill Lynch analyst Judah S. Kraushaar said in a special note to investors that "the key to Citigroup's success remains solid revenue growth and operating leverage." He maintained his "strong buy" rating, noting that after adjusting for the Argentina write-downs and an accounting change, earnings per share grew 15 percent in the first quarter compared with the year-earlier period. Citigroup chairman and chief executive Sanford I. Weill said in a statement accompanying the figures that they represented "exceptional results in the face of difficult economic conditions." Weill added: "Recent events in Argentina, including the imposition of currency translation regulations, the structuring of compensation bonds and the resumption of foreign exchange trading of the peso, have enabled us to determine with a greater degree of certainty the impact of the economic crisis in that country. Given this extraordinary situation, including actions taken by the Argentine government, we have taken substantial write-downs against our corporate and consumer loan portfolios and made prudent additions to our loan loss reserve." The write-offs and write-downs of Argentine holdings cost the bank $519 million, or 10 cents a share, in the first quarter, the report said. Loan loss reserves were raised $475 million, the bank said. Other special items included a gain of $1.06 billion for the IPO of Travelers, restructuring charges of $30 million and a charge of $47 million for accounting changes. In its breakdown by business, Citigroup said that income from consumer banking totaled $1.64 billion in the first quarter, up 21 percent from a year earlier. Earnings in its emerging markets division were $559 million, down 15 percent. Corporate and investment banking income was $987 million, down 4 percent; global investment management and private banking income was $406 million, up 6 percent; and property and casualty earnings were $327 million, down 4 percent. Bank of America At Bank of America, first-quarter earnings were $2.18 billion, or $1.38 per share, compared with earnings of $1.87 billion, or $1.15 a share, a year earlier. Analysts surveyed by Thomson Financial/First Call had predicted profits of $1.34 per share. In morning trading, shares were down $1.42 at $68.63 on the Big Board. Mortgage banking income grew 59 percent as Bank of America saw the volume and margins of loan originations increase. The core consumer and commercial banking segment generated profits of $1.4 billion. Average customer deposits grew 8 percent to $322 billion. Corporate and investment banking earned $503 million, 13 percent below last year, the bank reported. Income from equity investments lost $32 million, it said. Bad loans also grew slightly, with the bank writing off $840 million, about 1 percent of its average loans and leases. That was up from 0.8 percent the previous year.