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Citigroup Posts First Annual Profit Since 2007

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Citigroup announced quarterly profits of $1.3 billion on Tuesday, bringing its 2010 earnings to $10.6 billion, as the bank saw fewer losses on troubled loans.

This is the first time Citigroup has posted a full-year profit since Vikram S. Pandit was named chief executive in 2007. Citigroup reported a loss of $1.6 billion in 2009, on top of a crippling $18 billion loss the year before. The bank has now turned a profit for four consecutive quarters.

Nonetheless, Citigroup’s quarterly earnings of 4 cents a share disappointed Wall Street, in part owing to lackluster results in the investment banking business. Analysts had been expecting the bank to post profits of nearly 8 cents a share for the period, compared with the 33 cent loss that Citigroup reported in the fourth quarter of 2009.

“I’m pretty happy with the credit quality improvements, but obviously people were expecting more,” said Erik Oja, an equity analyst at Standard & Poor’s, who added that Citigroup’s report was “disappointing.”

Citigroup posted overall revenue of $18.4 billion for the quarter, compared with $7.9 billion in the period a year earlier. But full-year revenue fell 5 percent, to $86.6 billion, from $91.1 billion in 2009, as Citigroup’s investment bank struggled. The bank’s dwindling bond trading revenue was to blame for much of the decline.

The big question is how much of this profit has actually been collected in revenues and how much is still awaiting collection from those in arrears but booked as income?

Quite a good profit return especially with full year revenues falling 5%.

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NEW YORK (MarketWatch) -- Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 4.89, -0.24, -4.68%) said on Tuesday that it earned a $1.31 billion, or 4 cents a share profit in its fourth quarter, compared to a loss of $7.58 billion, or 33 cents a share a year ago. Total revenues in the fourth quarter were $18.37 billion, compared to $5.41 billion a year ago. Analysts polled by FactSet Research had expected Citigroup to earn 8 cents a share in the fourth quarter.

You have to love it on CNBS this morning - "What does the market really think about "C"s earnings this morning?"

Here's the answer to that:


Why not just be short and sweet: The earnings blew chunks and the stock is tanking.

The real story, however, is likely here....

Three years after bad home loans helped trigger the recession and six weeks after the government cashed in the last of its $45 billion Citigroup investment, the New York-based bank is still selling mortgages that violate quality standards, according to an internal Freddie Mac review obtained by Bloomberg.

Fifteen percent of the performing loans Citigroup sold to the government-owned mortgage-finance company in the second half of 2009 and the first half of 2010 had such flaws as missing appraisals or insurance documents or income miscalculations, according to the review of 375 mortgages.


Here's the problem folks - it's not just the repurchases. It's that Citibank is making money processing these loans and getting paid while not doing their job.

In any job anywhere if you screwed up to the point that 15% of what you did failed to meet quality requirements you'd be fired.

Unless, of course, the party you're doing it for is the government. Then we just kinda forget it, because, well, you're one of the guys that the government kneels before and performs obscene acts upon.

A couple of percent error rate is probably unavoidable. But rates beyond that imply that the firm simply doesn't care and is paying people for quantity without regard to quality.

Break this monster up and shut it down.

So is Citi making the profit by volume and then dumping it all on good old uncle sam?

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  • 312 Brexit, House prices and Summer 2020

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      • down 5% +
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