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Citigroup: Earnings Winner

NEW YORK ( TheStreet) -- Citigroup (C - Get Report) was the winner among large U.S. banks on Monday, with shares rising over 2% to close at $51.81.

The broad indices ended Monday's session with slight gains, but the KBW Bank Index (I:BKX) was up 0.6% to close at 64.85, with all but six of the 24 index components showing gains.

Citigroup was the latest money center bank to announce its second-quarter results, with earnings of $4.2 billion, or $1.34 a share, increasing from $3.8 billion, or $1.23 a share, in the first quarter, and $2.9 billion, or 95 cents a share, during the second quarter of 2012.

Excluding credit valuation adjustments (CVA) and debit valuation adjustments (DVA), earnings came in at $3.9 billion, or $1.25 a share, declining from $4.0 billion, or $1.29 a share the previous quarter. Operating earnings were up 25% from $3.1 billion, or $1.00 a share, during the second quarter of 2012, excluding CVA/DVA and also excluding a loss during the second quarter of 2012 tied to the sale of the company's stake in Akbank.

Again excluding CVA/DVA, Citi's total second-quarter revenue was $20.0 billion, up 8% year-over-year.

Analysts polled by Thomson Reuters had estimated Citi would post second-quarter earnings of $1.19 a share on revenue of $19.75 billion.

Atlantic Equities analyst Richard Staite in a note following the earnings release wrote "the beat versus consensus was driven by low net charge-offs of loans and a good performance in Securities and Banking. The results compared favorably against JPM with tangible book value per share increasing by 1.4% to $53.10 and the Basel III ratio improving to 10.0%."

Citigroup's estimated Basel III Tier 1 common equity ratio of 10.0% puts the company in full compliance with the Federal Reserve's minimum requirement of 7.0% plus an additional 2.5% buffer as a global systemically important financial institution (GSIFI) years ahead of the January 9.5% several years ahead of the January 2019 due date.

Citigroup also estimated that its Basel III supplementary Tier 1 leverage ratio was 4.9% as of June 30, putting it close to full compliance with federal regulators new minimum requirement of 5% for holding companies, ahead of a January 2018 deadline. Citi estimated its main banking subsidiary was already in compliance with a 6% Basel III supplementary Tier 1 leverage ratio minimum requirement.

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