Citigroup profits exceed estimates

The first-quarter profit compared with a net loss of $5.11 billion, or $1.02 a share, a year earlier, the bank said. On a per-share basis, the bank reported an 18-cent loss because of costs related to preferred dividends. The average estimate of 13 analysts surveyed by Bloomberg was a loss of 32 cents.

Citigroup investors hadn't seen a profit since before chief executive Vikram Pandit took over in 2007. While the bank cut compensation costs and took fewer write-downs, it could not halt rising delinquencies on home and credit card loans.

Citigroup benefited from higher fixed-income trading revenue that also bolstered earnings at Goldman Sachs Group Inc. and JPMorgan Chase & Co.

"We've seen good trading results from JPMorgan, from Goldman Sachs, and now from Citi," said Gary Townsend, chief executive officer of Hill-Townsend Capital LLC. "There is a question about sustainability, but it's clearly a good sign for the sector."

The industry's first-quarter profits aren't a "one-off" phenomenon, Barclays PLC president Robert Diamond said this week. "It has been quite a while since we've seen analysts talk about revenue as opposed to write-downs and balance-sheet risks," he said.

Citigroup fell 36 cents, or 9 percent, to $3.65. At its peak in late 2006, the stock was worth $56.41, valuing the company at $277 billion.

At the current price, the market value stands at about $20 billion.

The bank reported $4.69 billion of fixed-income trading revenue in the quarter, compared with a trading loss of $7.02 billion a year earlier. Stock-trading revenue was $1.9 billion, a 94 percent increase.

The company took $5.62 billion of write-downs on subprime-mortgage-related securities and other investments in its trading division, reflecting a further erosion in its market value. That compared with $14.1 billion of write-downs in the first quarter of 2008, for a positive $8.47 billion revenue swing.

Citigroup posted a $2.5 billion gain from accounting rules that allow companies to profit when their own creditworthiness declines. The rules reflect the possibility that a company could buy back its own liabilities at a discount, which under traditional accounting methods would result in a profit.

Citigroup already is benefiting from the Financial Accounting Standards Board's decision earlier this month to ease rules that forced banks to write down assets whose market value had been depressed so long their impairment was no longer considered temporary.