Citing a one-time accounting boost, Citigroup (C) on Monday reported a 74% rise in third-quarter 2011 profits compared with the quarter a year ago. The bank’s $3.8 billion in profits pushed earnings per share to $1.23 versus analysts’ expectations for $0.81.
Citi’s Q3 revenues included a $1.9 billion credit valuation adjustment (CVA) reflecting the widening of Citi’s credit spreads during the third quarter, similar to the $1.9 billion debt-valuation adjustment that JPMorgan reported last Thursday. Excluding CVA, Citi’s revenues totaled $18.9 billion, 8% below the prior-year period and 8% below Q2 2011. CVA increased reported third quarter earnings by $0.39 per share.
Chief Executive Vikram Pandit (left) said the bank continues to pare down its brokerage and asset management units, according to Citi’s quarterly release.
The brokerage and asset management units’ revenues were $55 million, compared with an $8 million loss in Q3 2010, largely reflecting the absence of markdowns on private equity investments in the prior-year period. The equity contribution from the Morgan Stanley Smith Barney joint venture was essentially unchanged versus a year ago.
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“Citi continues to navigate a challenging economic environment and delivered another quarter of solid operating results,” said Pandit in a statement. “We continued to manage our risk prudently while growing the businesses that are core to our strategy. We have reduced the size of Citi Holdings to 15% of our balance sheet and further improved our financial strength.”
Citi Holdings, which includes the brokerage and asset management units, reported assets of $289 billion, 31% lower than a year ago.