Financial firm Citigroup posted a $101 million profit in the third quarter, defying expectations for a loss, on higher deposit and loan volumes.
The profit compared with a loss of $2.82 billion a year earlier, the New York-based bank said today in a statement.
On a per-share basis, the company, in which the US government has a 34 per cent stake, had a loss of 27 cents because of a charge related to the previously announced exchange of government- and privately held preferred shares into common stock.
Eighteen analysts surveyed by Bloomberg News estimated a loss of 29 cents a share.
The company is trying to rebuild capital after reporting deficits every quarter last year and a record $28
billion annual loss.
"It's always better to make money than not make money," said Edward Najarian, an analyst at International Strategy and Investment Group in New York. "But you have to look at the credit-quality trends and whether the revenue items will recur to determine if the earnings are sustainable."
JPMorgan Chase, which repaid its bank-bailout funds earlier this year, said yesterday that profit climbed almost sevenfold in the quarter to $3.59 billion. Goldman Sachs Group, which also paid back the government, reported a $3.19 billion profit today, more than double the amount a year earlier.
"Sustainable profitability remains our primary goal in the near term," chief executive Vikram Pandit said in the statement. "While consumer credit trends are improving in international markets, the US consumer credit environment remains challenging."
Citigroup's agreement last week to sell its Phibro LLC oil-trading unit shows the hazards that Mr Pandit faces as he tries to restore profitability while satisfying demands from his government overseers. Citigroup had to accept a price of about $250 million, less than Phibro's average annual earnings, because it didn't want the risk that government pay czar Kenneth Feinberg might declare head trader Andrew Hall's $100 million annual payout to be excessive.
"They're forced to dump things in some cases that they probably would rather retain," said William Fitzpatrick, a financial-industry analyst at Racine, Wisconsin-based Optique Capital Management, which oversees $1 billion. "Who knows if there's more of that to come? With such poor visibility, it's hard to get excited about what the ultimate earnings power is."
The bank is expected to post a $1.74 billion net loss in the fourth quarter, according to the Bloomberg survey, as it replenishes reserves depleted by loan losses.
The shares, which more than quadrupled after plunging to a record low of $1.02 in March, fell to $4.88 in trading before the start of regular trading from $5 at the close yesterday.
Reuters