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Citigroup confounds pessimists with big profit

July 15, 2011 |  7:01 am

For the second day in a row, a big bank surprised analysts with strong results in the second quarter.

Citigroup announced Friday morning that it had a $3.3-billion profit from April to June of this year, up 22% from the same quarter last year. The bank showed $1.09 profit a share, up from 90 cents a year ago and significantly better than the 97 cents a share that analysts expected.

A good part of the profit was driven by accounting moves -- taking back money that had been put aside to cover losses -- but those moves were driven by optimism about consumers in the U.S. and abroad.

"The credit environment continued to improve," John Gerspach, the bank's chief financial officer, said on a call with reporters.

Gerspach said the bank is in a position to begin returning capital to shareholders at some point next year.

Citi's announcement came a day after JPMorgan released its own surprisingly good second-quarter results and flew in the face of several recent predictions that big American banks would show bad results for the recent quarter. 

In early trading, Citi's stock was up 2.3%, or 91 cents, to $39.93. 

-- Nathaniel Popper