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Beats Expectations; Posts...

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Citigroup, after posting a string of losses for the previous five consecutive quarters, follows conglomerates Goldman Sachs, JP Morgan which have surprised the street with better earnings than estimated in the first quarter of this year.

Citigroup posted $1.6 billion profit against a net loss of $5.1 billion in corresponding quarter a year ago. Its total revenues also almost doubled at $24.8 billion, from that in the corresponding period last year.

Besides Citigroup, which has got three bailout packages from the US government since the beginning of economic crisis, search engine major Google also today announced more than 8 per cent growth in profit. Better than street expected earnings by big corporation like Citigroup and Goldman Sachs saw the Dow Jones Industrial Average gaining a moderate 0.35 per cent in early trade.

These are also likely to inject lease of fresh life into the recession-hit US economy. Good earnings are also expected to lift the banking industry's confidence which was badly battered after a series of collapses of financial institutions in the world's biggest economy.

The company said in the statement that increase in revenues were due to strong trading results and lower net write-downs in the Securities and Banking revenues which posted revenues of $7.2 billion. However, Citigroup has not been able to share the profit with its shareholders due to special arrangement and reported a loss of 18 cents per share based on 5,835 million outstanding shares.

"The $0.18 loss per share reflected the reset in January 2009 of the conversion price of the $12.5 billion convertible preferred stock issued in a private offering in January 2008.

This did not have an impact on net income but resulted in a reduction to income available to common shareholders of $1.3 billion or $0.24 per share," the statement added.

Moreover, the struggling financial service firm has reduced its headcount by about 13,000 since the fourth quarter 2008 to 309,000, the company statement said.

"Our results this quarter reflect the strength of Citis franchise and we are pleased with our performance. With revenues of nearly $25 billion and net income of $1.6 billion, we had our best overall quarter since the second quarter of 2007, " Citigroup Chief Executive Officer Vikram Pandit said.

The difficult economic environment, however, has continued to have negative impact on all other businesses. Global Cards GAAP revenues declined 10 per cent, mainly due to higher credit losses flowing through the securitisation trusts in North America.

Further, Global Wealth Management revenues declined 20 per cent, reflecting the adverse impact of market conditions on capital markets and investment revenues across all regions.


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