New York, Oct. 16: Citigroup reported a 23 per cent increase in third-quarter profits on Tuesday, providing a welcome distraction to investors anxious about numerous investigations involving its investment banking business.
The bank said the strength of its consumer business, along with a gain on the sale of its headquarters on Park Avenue, helped offset losses in its investment portfolio and write-downs on loans to telecommunications companies and related to Argentina.
The performance lifted Citigroup’s stock on Tuesday, which rose $ 3.83, to $ 34.14. Shares have tumbled 27.5 per cent for the year.
Citigroup’s stock has fallen as analysts struggled to quantify the cost of numerous lawsuits and investigations involving conflicts of interest at the company’s investment bank, Salomon Smith Barney. Michael Mayo, an analyst at Prudential Financial, has estimated that Citigroup could eventually pay billions of dollars in fines and settlements. Citigroup’s largest shareholder, Prince Walid bin Talal of Saudi Arabia, said Tuesday that now that Citigroup has reported such strong results, “All those doubters should shut up,” repeating the words several times for emphasis.
“The stock has been hammered like the company is going out of business,” he said. “It is unjustifiable.”
At the start of a conference call with analysts, Sanford I. Weill, chief executive of Citigroup, said, “I can’t believe the company we’re about to talk about is the same as the one you’ve been reading about in the newspapers,” trying to ease concerns about recent investigations that have hurt Citigroup’s stock. Citigroup had net income of $ 3.92 billion, or 76 cents a share, compared with $ 3.18 billion, or 62 cents a share, the same quarter a year ago.