Citibank (NYSE: C) disappointed investors, shareholders and industry analysts when they announced their disappointing third-quarter earnings which were significantly hindered by non-performing loans.
Citibank earned a slim profit of $101 million, but common stockholders endured a loss of 27 cents per share because most of the profit was paid back to the government in dividends for its investment as part of the various bailouts that Citibank has received.
Although the results that Citibank posted were a bit better than analysts’ expectations, Citibank shares fell sharply on Thursday and Friday. At the end of trading on Wednesday, Citibank was trading at $5.00 per share, but by Friday afternoon, the price had declined to $4.63, representing a 9.2% drop in value.
“While consumer credit trends are improving in international markets, the U.S. consumer credit environment remains challenging,” said Vikram Pandit, chief executive officer of Citigroup in a statement.
Earlier in the week, JPMorgan Chase indicated that it expected increased losses from consumer loans, such as home equity loans, credit cards and mortgages by allocating $2 billion of its profit to take care of their expected losses. Citibank said that their total losses from consumer were a whopping $8 billion. Citibank also increased its expected losses for the fourth quarter by $800 million.
If there’s any good news from Citigroup’s earnings announcement, it’s that its customers are continuing to save. During the third quarter, Citibank customers added more than $28 billion in deposits to the bank. Citibank reported that their global deposits reached $833 billion as of August, 31st.
