Citigroup’s latest result disappointed the market as the company announced less than expected profits for the fourth quarter in 2010.
Citi’s profit for the quarter stood at $1.3 billion (£811 million), compared to a loss of $7.6 billion for the same period, last year.
This is Citi’s first profit in two years after 2008 and 2009 and total profit for 2010 now stands at $10.6 billion. However, investor’s were expecting a better performance.
CEO Vikram Pandit termed the year critical to the banking group’s turnaround story saying “2010 was a year full of milestones and was critical for the turnaround of this institution”.
Smaller provisions for bad debts and strong performance by the core divisions – which employ more than 11,000 people in UK, helped the bank perform robustly and resulted in overall profitability for the year.
Citi’s fixed income division – the segment trading in bonds and credit derivatives, however, didn’t fare well. “This was one of the weaker quarters for trading”, commented Chief Financial Officer John Gerspach during a conference call with reporters.
Mr. Gerspach conceded that there are other areas as well where the bank has not done well, such as the investment banking and the Mergers and Acquisitions divisions.
Mr. Pandit has sold assets, laid off excess staff in an effort to preserve cash and has been focusing on its core operations like retail and investment banking to return to profitability.
The bank had received $45 billion from the US Government as bailout money and has almost repaid the whole amount. The US treasury will possibly sell the remaining stake before the end of the current year.