reported a better-than-expected quarterly profit
as credit losses slowed and the bank set aside much less money to cover bad
Analysts said the results were
mixed. Revenue rose slightly from a year earlier but fell from the second
quarter, and the bank dipped into reserves to cover bad loans. Investors
expressed concerns about how a widening foreclosure crisis could affect the
“Earnings are OK and revenues are
light, but the key will be their comments on foreclosures,” said Michael
Holland of Holland & Co in New York.
In the past month, U.S. government
officials have launched probes into the banking industry’s foreclosure
practices following allegations that thousands of home foreclosures may have
been illegal because they were improperly documented.
Citigroup has repeatedly said its
document review process is sound, and it has declined to follow large rivals,
including Bank of America Corp and JPMorgan Chase and Co, in suspending foreclosures.
Like stronger competitor JPMorgan Citigroup beat third-quarter earnings expectations
in part by releasing money it had set aside to cover bad loans.
Analysts, who tend to discount
earnings powered by reserve releases as “low-quality,” have questioned how bank
profits can keep growing if a sluggish economy results in low loan demand and
relatively high credit losses.
The third-largest U.S. bank by
assets posted a third-quarter profit of $2.2-billion, or 7 cents per share,
compared with a year-earlier loss to shareholders of $3.2-billion, or 27 cents
Analysts on average had expected a
profit of 6 cents a share.