Citigroup Inc. provided more evidence Monday that the nation's big banks may have turned a corner. The bank reported a surprise first-quarter profit as trading revenue offset losses from failed loans.
Citigroup said it earned $4.4 billion after payment of preferred dividends, compared with a loss of $696 million a year earlier.
That was the bank's biggest quarterly profit since the second quarter of 2007.
The company cited strong trading of bonds, stocks and other securities for its big profit. Citigroup, one of the hardest hit banks during the credit crisis and recession, said losses from bad loans fell for the third consecutive quarter. It also set aside less money for loan losses.
"Loan losses coming down with growth of top-line revenue speaks to the overall recovery," said Oliver Pursche, executive vice president at Gary Goldberg Financial Services.
Pursche is a co-portfolio manager of the GMG Defensive Beta Fund, which holds shares in Citigroup, but is not currently buying shares.
Citigroup earned 15 cents per share on revenue of $25.4 billion. That easily beat analysts expectations of a slight loss, according to Thomson Reuters.
Overall profit at the bank was driven by the $8 billion Citi made in its securities and banking operations, which includes its trading business. That was up $4.7 billion from the fourth quarter.
That has boosted hopes that the worst of the credit crisis has passed and banks may be entering a period of sustained profitability.
Citigroup shares were up 32 cents, or 7 percent, to $4.88 in trading Monday.- AP