(Joe Rauch) - Citigroup Inc reported higher third-quarter earnings on Monday as the bank set aside less money to cover bad loans and recorded an accounting gain banks can take in turbulent markets.
Investment banking fees dropped as the European debt crisis cut into stock and bond issuance and merger activity. Operating expenses rose, in part because of investments the bank is making to boost its business.
Citigroup, the third-largest U.S. bank by assets, reported net income of $3.77 billion, or $1.23 per share, up from $2.17 billion, or 72 cents per share, in the same quarter last year.
The third-quarter results included a pre-tax gain of $1.9 billion, or 39 cents per share after taxes, due to the bank's widening credit spreads during the quarter. When a bank's debt weakens relative to U.S. Treasuries, it can record an accounting gain because it could profit from buying back debt.
Excluding that gain, Citi earned $2.6 billion, or 84 cents per share.
Revenue at the bank's continuing securities and banking business fell 12 percent excluding the debt value adjustment, to $4.84 billion, hurt by declining underwriting and merger advisory fees.
JPMorgan Chase & Co also reported declines in investment banking fees when it reported third-quarter results last week. JPMorgan also reported an accounting gain identical to Citi's.
Overall operating expenses for Citigroup rose 8 percent from a year earlier. Operating expenses were $12.46 billion and have been hovering around that level since the fourth quarter of 2010. From the beginning of 2009 through the third quarter of 2010, quarterly operating expenses were typically closer to $11.9 billion.
It was not immediately clear if the quarterly earnings were comparable to analysts' average earnings forecast of 81 cents per share, according to Thomson Reuters I/B/E/S.
Citi, which received three U.S. government rescues at the height of the financial crisis, is seeing its problem loan portfolio shrink.
Nonaccrual loans fell to $7.95 billion from $12.46 billion a year earlier.
The bank's share price has fallen about 40 percent this year, in line with declines for other large banks.
Citigroup shares rose 2 percent to $29.00 in early trading.
(Reporting by Joe Rauch in Charlotte, N.C.; editing by John Wallace)
Copyright 2011 Thomson Reuters. Click for Restrictions.
Support HuffPost
Our 2024 Coverage Needs You
Your Loyalty Means The World To Us
At HuffPost, we believe that everyone needs high-quality journalism, but we understand that not everyone can afford to pay for expensive news subscriptions. That is why we are committed to providing deeply reported, carefully fact-checked news that is freely accessible to everyone.
Whether you come to HuffPost for updates on the 2024 presidential race, hard-hitting investigations into critical issues facing our country today, or trending stories that make you laugh, we appreciate you. The truth is, news costs money to produce, and we are proud that we have never put our stories behind an expensive paywall.
Would you join us to help keep our stories free for all? Your contribution of as little as $2 will go a long way.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.
Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.
Contribute as little as $2 to keep our news free for all.
Can't afford to donate? Support HuffPost by creating a free account and log in while you read.
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. Would you consider becoming a regular HuffPost contributor?
Dear HuffPost Reader
Thank you for your past contribution to HuffPost. We are sincerely grateful for readers like you who help us ensure that we can keep our journalism free for everyone.
The stakes are high this year, and our 2024 coverage could use continued support. If circumstances have changed since you last contributed, we hope you’ll consider contributing to HuffPost once more.
Already contributed? Log in to hide these messages.
