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Citigroup Inc, the largest US bank, said on October 15 that third-quarter profit fell 57 percent, hurt by losses and writedowns for subprime and leveraged loans, fixed-income trading and weakness in its consumer business. Net income fell to $2.38 billion, or 47 cents per share, from $5.51 billion, or $1.10, a year earlier.
Revenue rose 6 percent to $22.66 billion, while operating expenses increased 22 percent to $14.56 billion. Analysts on average expected profit of 43 cents per share on revenue of $20.81 billion, according to Reuters Estimates.
Results included pre-tax writedowns of $1.35 billion for leveraged loans, $1.56 billion for subprime mortgages, and $636 million from fixed income trading. They also included a $729 million pre-tax gain from the sale of shares in Brazilian credit card transaction processor Redecard SA.
Meanwhile, credit costs increased $2.98 billion, including a $780 million increase in net credit losses and a $2.24 billion charge to increase reserves for bad loans.
Chief Executive Charles Prince called performance "well below our expectations." Citigroup had on October 1 projected a 60 percent drop in quarterly earnings. The quarter marked the latest setback for Prince, who is trying to boost a stock that has risen only 5 percent since he took the helm just over four years ago.
Citigroup shares closed Friday at $47.87 on the New York Stock Exchange. They have fallen 14 percent this year, while the Philadelphia KBW Bank Index is down 8 percent.

Copyright Reuters, 2007

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