Citi Profit Tumbles 57%

Citi (C) rose in early trading Monday after the bank's third-quarter earnings beat sharply reduced analyst estimates.

The New York-based bank made $2.38 billion, or 47 cents a share, for the quarter ended Sept. 30. That's down 57% from the year-ago profit, though it exceeds the 44-cent profit expected by Wall Street analysts.

The announcement comes just two weeks after Citi became the first big bank on Wall Street to warn that results for the September quarter would be pulled down by hefty write-offs tied to the credit crunch that swept markets this summer.

Citi announced writedowns of $3.3 billion on its exposure to leveraged loan commitments, subprime mortgages and fixed-income trading, plus a $2.6 billion hit tied to rising costs in its global consumer business. Citi said the charges would pull its third-quarter bottom line 60% below year-ago levels.

"This was a disappointing quarter, even in the context of the dislocations in the subprime mortgage and credit markets. A significant amount of our income decline was in our fixed-income business, where we have a long track record of strong earnings, and this quarter's performance was well below our expectations," said CEO Charles Prince.

"Although we generated strong momentum in many of our franchises, our fixed-income results, along with higher credit costs in global consumer, led to significantly lower net income," Prince added.

Since Citi dropped its bombshell, it has been joined in the writedown parade by numerous banks including Merrill Lynch (MER) and UBS (UBS).

Investors will find out this week how badly Citi rivals Bank of America (BAC) and JPMorgan (JPM) were hit by the credit market turmoil.

Citi rose 63 cents to $48.50.

>To order reprints of this article, click here: Reprints