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Instant View: Citigroup turns in profit, shares rise

NEW YORK (Reuters) - Citigroup Inc posted a $4.43 billion first quarter profit, as it set aside less money cover credit losses.

The third largest U.S. bank posted first quarter net income to shareholders of 15 cents a share, compared with a $966 million shareholder loss, or 18 cents a share, in the same quarter last year.

Citigroup shares gained 3.3 percent in premarket electronic trading.

The following is reaction from industry analysts and investors:

TIM GHRISKEY Chief investment officer of Solaris Asset Management in Bedford Hills, New York

“They certainly on first look -- and we haven’t done all of our work on them yet -- it looks like these are very good earnings by Citigroup. The earnings came in well above expectations, so this is a positive surprise. We think the volatility in the stock is more related to what is happening with financials and the overall market today, given primarily the Goldman Sachs issue, which despite Friday’s decline, seems to be lingering on the market.

“Back to Citigroup, the credit losses or provisions for credit losses declined and that was certainly good news, that is the lowest level in 2 years, and expenses were also down so Citi continues to cut costs. It’s more of a Goldman and market overhang this morning in terms of the volatility because the earnings were quite good, the revenues were well above consensus. The capital ratios, Tier 1 capital increased significantly and that shows the bank is financially stronger, more sound.”

TIM SMALLS, HEAD OF U.S. STOCK TRADING AT BROKERAGE FIRM

EXECUTION LLC IN GREENWICH, CONNECTICUT

“Citi results showed nothing exciting. It was a beat but there was that lower tax rate involved so it came as a bit of a disappointment to investors. But in general, the numbers were too weak to impact the stock in a major way, either up or down. But it is certainly pressuring the futures combined with the Goldman Sachs news.”

WILLIAM LARKIN, FIXED INCOME MANAGER AT CABOT MONEY

MANAGEMENT IN SALEM, MASS, AUM OF $475 MILLION:

“If you look at market conditions for the banks right now they are optimal. The yield curve, the credit conditions from a spread basis, and lending conditions, have drastically improved for high-quality borrowers. Bank of America and Citi I put in the same category because they’re so vast, sort of one-stop-shopping.”

“It seems the trends across most of the banks are similar ... and pointing to an improved position. That was before the Goldman Sachs thing happened, and then the gloves came off.”

“Right now the liability question is out there. It’s like a rabbit hole -- you don’t know how deep this thing is going. If there are disclosure issues right across the industry then you’re going to see all these trading desks pulled into long lawsuits.”

WILLIAM SMITH, CHIEF EXECUTIVE OF SMITH ASSET MANAGEMENT

“They look pretty stable. When you finally cut costs, when you sell off assets, and when you have an inflation of asset values, even your most distressed values, this is what happens.”

“This is a decent number. They should be rewarded, but who knows.”

MATT MCCORMICK, PORTFOLIO MANAGER, BAHL & GAYNOR

“The trend of positive release for financials continues. It looks like a solid release for Citi. However you have the micro situation with Citi, but the macro situation is that Goldman is going to be dominating the news with financials for days to come.”

Reporting by Steve Eder, Chuck Mikolajczak, Angela Moon, Jonathan Spicer and Maria Aspan

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