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Citi's profit drops 96 pct

Monday, July 14, 2014 - 01:13

Citigroup's better-than-anticipated quarterly results came just after the bank announced a $7 billion settlement over a mortgage securities probe tied to the financial crisis, driving the stock higher at the market open. Fred Katayama reports.

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A $3.8 billion charge to cover a settlement over a mortgage securities probe helped slash Citigroup's quarterly earnings 96 percent. Revenue also fell. The bank got slammed by a sharp drop in securities trading revenue in a quarter marked by low volume and low volatility. But its operating performance was solid. That drop in trading revenue was much smaller than what the bank had forecast. Citi managed to grow loans in its core businesses, and investment banking revenue soared. The bank released the results an hour after announcing it'll pay $7 billion to settle that investigation over mortgage securities it had sold. That's twice what analysts had expected, and it includes a $4 billion penalty that's twice what JPMorganChase paid to settle a similar case. But news of that settlement and earnings results that beat estimates propelled investors to buy the stock, driving it sharply higher at the start of trade. The stock is down nearly 10 percent this year amid a series of headlines plaguing the bank: an alleged accounting fraud at its Mexican unit and the failure to get the Fed's blessing to pay out dividends.

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Citi's profit drops 96 pct

Monday, July 14, 2014 - 01:13