Citigroup Beats On Higher Revenues, Shrinking 'Bad Bank' (Update 3)

  • Citigroup reports second-quarter profit of $4.2 billion, or $1.34 a share.
  • Excluding CVA/DVA gains, EPS was $1.25 per share
  • Net revenue comes in at $20.5 billion, or $20 billion excluding CVA/DVA.
  • The consensus estimate among analysts was EPS of $1.17 on revenues of $19.75 billion.

Updated from 8:47 a.m. ET with additional details on performance and management commentary from media call.

NEW YORK ( TheStreet) -- Citigroup ( C) on Monday said net profit for the second quarter rose 42% year-over-year, on higher revenues, continuing improvement in credit quality and shrinking losses at its non-core arm.

The New York-based bank reported net income for the second quarter of $4.2 billion or $1.34 a share, compared to $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.

Revenue for the second quarter was $20.5 billion, up 11% year-over-year.

The current quarter's results included $477 million in pre-tax gains from the revaluation of the firm's bonds as spreads widened. The year-ago quarter included a $219 million pre-tax gain from bond revaluation a loss of $424 million ($274 million after tax) from the sale of a 10.1% stake inAkbank.

Excluding items, second-quarter earnings per share was $3.9 billion or $1.25 per share, up 25% from prior year, while revenues came in at $20 billion, up 8% over the period.

The bank handily beat consensus estimates. Analysts polled by Thomson Reuters expected earnings of $1.17 a share on revenues of $19.75 billion.

Shares were rising 2% in early trading Monday to $51.87.

Revenues at Citicorp, the bank's core business arm, rose 7% to $18.9 billion, excluding items. Earnings rose 23% to $4.7 billion year-over-year.

Citi Holdings, the bank's non-core arm, saw revenues rise by 17% from the prior-year period, while losses shrunk by37% to $570 million. Citi Holdings assets at the end of the second quarter accounted for 7% of Citigroup assets, down from 8% at the end of the first quarter, as the bank continued to sell troubled mortgages and wind down its portfolio.

"Our businesses performed well during the quarter and these results are well-balanced through our products and geographies, especially in the emerging markets, where growth is being challenged,"Citigroup CEO Mike Corbat said. "We also continued to make progress in several critical areas. We reduced the earnings drag caused by Citi Holdings, where we saw the largest percentage reduction of assets since 2010. We again consumed a modest amount of DTA deferred tax assets , bringing the total utilized to about $1.3 billion for the first half of the year."

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