Citigroup Earnings Eroded by Economic Headwinds
Citigroup (NYSE:C) sweat some value in early trading on Tuesday after reporting third-quarter earnings that fell just short of analyst expectations. The firm said revenues excluding special items — such as CVA/DVA, tax benefit, and costs associated with the Morgan Stanley Smith Barney joint venture — fell 5 percent, to $18.22 billion. On a comparable unadjusted basis, Citigroup revenues of $17.9 billion were up 30 percent on the year, a result of large one-time items in the year-ago period.
The firm reported adjusted net income of $3.26 billion, or $1 per share, which compares against net income of $468 million, or 15 cents per share, in the year-ago period. Excluding special items — the firm took a pretax loss of $4.7 billion related to the MSSB joint venture ($2.9 billion after tax) — earnings of $1.02 per share were down 4 percent on the year.
Cash value added in the third quarter was -$336 million ($206 million after taxes), which is still somewhat unattractive but a marked improvement over a negative CVA of $776 million ($485 million after taxes) in the year-ago period.