Citigroup’s third-quarter earnings rise 35 percent |

Citigroup’s third-quarter earnings rise 35 percent

NEW YORK – Citigroup Inc., the nation’s largest financial institution, said Monday its third-quarter earnings rose 35 percent, including a hefty $2.12 billion gain from the sale of its life-insurance and annuities business.Citigroup said net income totaled $7.14 billion, or $1.38 per share, in the third quarter, up from $5.3 billion, or $1.02 per share, a year earlier.Excluding the sale of Travelers Life & Annuity to MetLife Inc., which closed in the July-September period, and a handful of special charges, Citigroup’s income from continuing operations was 97 cent per share in the third quarter, up from 96 cents a year earlier.The special charges included $222 million in costs related to Hurricane Katrina, $124 million in credit-card losses because of the recent rush of bankruptcies and a $94 million increase in corporate loan loss reserves. The Katrina costs cut earnings by 4 cents per share, Citigroup said.Revenue increased 15 percent to nearly $21.5 billion in the third quarter from $18.74 billion a year earlier.Analysts surveyed by Thomson Financial had expected Citigroup to earn 99 cents per share on revenue of $20.47 billion.Charles Princes, the company’s chief executive officers, said in a statement accompanying the results that diversity helped buoy earnings despite the special charges.”Our results reflect excellent performance in our corporate and capital markets driven businesses,” he said.”Corporate and investment banking revenues increased 35 percent, including record revenues in transaction services and strong revenue growth across fixed income markets, equity markets, and investment banking,” Prince said. “In Smith Barney, revenues grew 13 percent. We also continued to generate robust customer volume growth in our international consumer franchise, where revenues increased 10 percent.”This, he said, “offset sluggish revenue growth” in the U.S. banking division, which continued to feel the effects of a flattening yield curve – the result of rising short-term rates and comparatively low long-term rates. This squeezes the so-called net interest margin, which is the difference between what banks pay to borrow money and what they can earn when they lend it.Citigroup said tighter net interest margins affected its results in both its North American card division and its North American consumer finance division.In response to Katrina, which hit the Gulf Coast in late August, Citigroup has waived loan fees and interest and restructured some loan payments.”We have also recorded a $222 million after-tax charge this quarter, primarily to reflect the credit implications of the economic dislocation and hardship our customers are experiencing,” Prince said.For the first nine months of the year, Citigroup reported net income of $17.66 billion, or $3.39 a share, up from $11.73 billion, or $2.24 per share, in 2004. Net income from continuing operations was $14.8 billion, or $2.85 a share, up from $10.9 billion, or $2.09 a share.Shares of New York-based Citigroup rose 46 cents, or 1 percent, to $45.50 in early trading on the New York Stock Exchange. The stock has traded in a 52-week range between $42.10 and $49.99.—On the

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