Citigroup (NYSE: C) had a quarter that was as bad as the big bank said it would be. The company's earnings release reported net income for the 2007 third quarter of $2.38 billion, or $0.47 per share, a decline of 57% from the prior-year quarter. Results include a $729 million pre-tax gain on the sale of Redecard shares. Return on equity was 7.4%. On October 1, 2007.
What could go wrong at Citi did go wrong. Earnings at the bank's large consumer business fell 44% to $1.783 billion. Higher credit costs were driven by a $134 million pre-tax charge to increase loan loss reserves, reflecting a weakening of leading credit indicators.
In the company's banking division, net fell 74% to $1.721 billion. Writedowns killed the numbers at the division. Net investment banking revenues were $541 million, down 50% due to writedowns of $901 million, net of underwriting fees, on funded and unfunded highly leveraged finance commitments.
The only bright spot for Citi was wealth management where net was up 29% to $379 million. But managing money for rich people can only take the global bank so far.
One thing is for sure. The current board and CEO can't take another quarter like this one.
Douglas A. McIntyre is a partner at 24/7 Wall St
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