Overseas Strength Lifts Citi - TheStreet

Overseas Strength Lifts Citi

Earnings beat estimates.
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Citi (C) - Get Report posted a strong second quarter as international expansion offset some weakness in the bank's U.S. consumer portfolio.

The New York-based bank made $6.23 billion, or $1.24 a share, for the quarter ended June 30, up from the year-ago $5.27 billion, or $1.05 a share. Revenue rose 20% from a year ago to a second-quarter record of $26.63 billion, Citi said.

Analysts surveyed by Thomson Financial were looking for a profit of $1.13 a share on revenue of $24.89 billion.

"We have very clear priorities to drive growth and we are executing on all of them. We generated record revenues, up 20%, and record earnings from continuing operations, up 18%, both driven by our record international results," said CEO Charles Prince. "We continued to generate revenue and volume growth in our U.S. consumer franchise, while making excellent progress in re-weighting Citi toward our other businesses, especially our international franchises, where revenues and net income increased over 30%. Our capital markets-driven businesses performed extremely well and international consumer revenues and volumes grew at a double-digit pace."

The news comes as Prince tries to cut costs to boost Citi's growth. He has focused on expanding overseas operations while rivals such as

Bank of America

(BAC) - Get Report

and

JPMorgan

(JPM) - Get Report

have been buying up banks in the U.S.

Citi said results were hit by rising credit costs and increased delinquencies in the U.S. consumer sector. In U.S. consumer, higher credit costs reflected an increase in net credit losses of $183 million and a net charge of $245 million to increase loan loss reserves. The $245 million net charge compares to a net reserve release of $274 million in the prior-year period. The increase in net credit losses and loan loss reserves primarily reflected higher delinquencies in second mortgages in consumer lending, a change in estimate of loan losses inherent in the cards portfolio, and portfolio growth.

Higher credit costs also reflected the absence of a $75 million release of loan loss reserves in the prior-year period. The net credit loss ratio in real estate lending increased 21 basis points to 0.40%.