Skip to main content

Updates to add latest share price. An earlier version of this story incorrectly stated the company reported a net loss for the quarter.



) --


(C) - Get Citigroup Inc. Report

posted a slight profit for the third quarter but turned in a loss on a per share basis due to one-time items and dividend payouts.

The company said net income for the three months ended Sept. 30 was $101 million. On a per share basis, however, it lost 27 cents a share for the quarter, factoring in the impact of a preferred-to-common stock swap and the payment of preferred dividends.

The average estimate of analysts polled by Thomson Reuters was for a loss of 38 cents a share in the September period.

Revenue came in at $20.4 billion, slightly better than analysts were expecting.

The company said credit losses fell slightly to $8 billion for the quarter, including an addition of $802 million to its net loan loss reserves. Citi's loan loss provision was $3.9 billion in the second quarter.

Citi's total allowance for loan losses stood at $36.4 billion, or 5.9% of total loans, as of Sept. 30, up from $35.9 billion in the prior quarter, or 5.6% of total loans in the second quarter.

Total credit costs fell 28% on a sequential basis to $9.1 billion.

Citi completed a $58 billion preferred-to-common exchange during the third quarter. The exchange offer resulted in an $851 million after-tax gain, but also in a $3.1 billion reduction in income available to common shareholders, resulting in an incremental net loss of 18 cents a share. The reported loss per share also reflected the payment of $288 million in preferred stock dividends, which did not affect net income but reduced income available to common shareholders by 2 cents per share.

"This was an important quarter for us," CEO Vikram Pandit said in a release. "The completion of the exchange offers and the significant actions taken during the last few quarters have created a strong foundation. With strong capital, strong liquidity and a strong franchise, we are looking forward. We continue to execute steadily against our plan, and sustainable profitability remains our primary goal in the near term. While consumer credit trends are improving in international markets, the U.S. consumer credit environment remains challenging."

TheStreet Recommends

Citi's Tier 1 Capital ratio was 12.7% at the end of September while its Tier-1 Common ratio was 9.1%.

Earlier this year, Citi split the company into two businesses - Citicorp and Citi Holdings. Still within Citicorp, its so-called good bank, both revenue and income fell during the quarter, it said.

Revenue from regional consumer banking barely flinched, up just 1% from the second quarter to $5.7 billion, primarily from increases from the company's international operations. Revenue from North America was flat in the quarter, as "increasing credit losses flowing through the securitization trusts offset increases in net interest revenue due to higher deposit and loan volumes," the company said.

Securities and Banking revenue fell 33% from the year earlier and 29% from the second quarter, to $4.89 billion, reflecting $1.7 billion in credit value adjustments, Citi said.

Investment banking revenue remained flat from the second quarter as an "uptick in advisory revenue offset modest declines in debt underwriting," the company said.

The company also had "diminished trading opportunities" in equity derivatives, credit, and securitized products due to the "improvement in market liquidity, traditional seasonal factors and lower volatility in many markets," Citi added. Equity markets and fixed income markets revenue fell significantly from the prior quarter.

Transaction services had flat revenues of $2.45 billion , Citi said.

The results are in stark contrast to that of

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report

, which reported earnings of 82 cents a share that widely exceeded analysts estimates, mainly from strong investment banking results.

Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report

, which also reported Thursday, posted a profit of $3.2 billion, or $5.25 a share.

Citi has received $45 billion in government bailout funds since the start of the financial crisis, culminating in the preferred-to-common stock deal this summer. The transaction effectively makes the U.S. government, which converted some $25 billion of preferred shares, a 34% stakeholder in Citi.

Citi has made progress in its turnaround mission, even if it is likely at the behest of regulators. It has split the company into a good bank/bad bank structure, and sold more than 30 non-core businesses. Among its achievements was completing a joint venture between its profitable wealth management arm, Smith Barney and

Morgan Stanley

(MS) - Get Morgan Stanley Report


Last week, the company agreed to sell its Phibro energy trading unit to

Occidental Petroleum Corp.

(OXY) - Get Occidental Petroleum Corporation Report

for $250 million. While the unit was a major profit generator for the firm, it was also causing a headache for Citi over its agreement to pay a guaranteed $100 million to one of its top traders, a contentious point for the government. The sale is more evidence the company is trying to be responsive to federal concerns.

Shares of Citi have risen more than 60% since the company reported its second-quarter results in mid-July. The stock was down 5% to $4.73 in recent trades.

"Looking forward, we will continue to focus on sustainable profitability and growth, repaying TARP and helping support America's economic recovery," Pandit said.

Aite Group analyst Nancy Atkinson said in a statement that concerns regarding Citi's credit quality continue. "

Having adequate reserves for those concerns continues to drain Citi," she said. "'Sustainable profitability' as described by Pandit is the right goal, but Citi still has a number of challenging quarters ahead of it."

--Written by Laurie Kulikowski in New York