Earlier today, Citigroup (NYSE: C) disclosed their fourth-quarter earnings results. The news was positive in whole, showing net income of $1.3 billion after it recorded fewer losses from loans, allowing it to take money out of reserves it keeps aside for such loans.
The firm’s earnings were dragged down by the fixed income market, which was volatile in the quarter as it was pressured by the bailout of Ireland and falling bond prices. Analysts surveyed by FactSet expected 7 cents a share in earnings for the megabank, but on a per share basis, Citigroup’s earnings amounted to 4 cents a share, causing the stock to fall in pre-market trading.
Although somewhat disappointing, the firm showed significant strides and finally may be on solid ground. During the same quarter last year, the firm showed loss of $7.6 billion, or 33 cents a share. For the year, it reported a profit of $10.6 billion on revenue of $86.6 billion. It’s the first year the bank reported an annual profit since 2007.
As more Citigroup customers were able to meet payments on credit cards and home loans, loan loss write-offs fell during the quarter. This echoes a similar theme arising across the major banks. Customers are making good on their loans, and bank profits are improving as a result. Its credit losses of $6.9 billion were down $805 million from the previous quarter, or 11 percent, marking the sixth consecutive quarter of decline.
Vikram Pandit, CEO of Citigroup commented “2010 was a year full of milestones and was critical for the turnaround of this institution.” Pandit’s review is accurate, and that is coming through in the firm’s stock price which has begun to show the stability necessary for long run growth.
