Earnings Of Citigroup In Q1 Surpass Expectations

Earnings Of Citigroup In Q1 Surpass Expectations

The earnings of Citigroup for the first quarter reached $3.9 billion or $1.23 per share, which was higher than what was initially expected by analysts. Revenues of the global bank also reached $20.1 billion.

The announcement came as another fraud case worth around $30 million was discovered by the bank at its unit in Mexico. Michael Corbat, CEO of the company, revealed it was not easy to see the situation where the goal of the bank is reached after it failed economic stress tests that were administered by the Federal Reserve.

The performance of the company was suitable enough despite the challenging revenue environment, according to Corbat. Shares of the company closed higher by around 4.4 percent at $47.67.

Although the earnings of Citigroup in the first quarter were positive, revenues have declined by 1 percent compared to the same period last year. The decline in revenues in fixed-income markets was the main reason for the decrease in revenues.

The fraud in Mexico also influenced the decline in revenues as an internal review showed a gap of $400 million that was owed by the unit in Mexico by Oceanografia SA de CV, an oil-services firm based in Mexico. A smaller fraudulent activity was later discovered involving the same parties in the initial fraudulent fraud case of the company.

Fraud disclosure had a negative effect on the turnaround efforts of Citibank behind the leadership of Corbat. The stress-test also had an influence on the efforts of the chief executive as the bank was one of the banks that were prevented from increasing stockholder dividend payments as well as increase stock buybacks.

The bank understands the concerns of Fed officials as it aims to make the capital planning process consistent with the best standards. Corbat revealed the issue was associated with the strategy or business model of the company and not the capability of the company in generating capital.

Corbat revealed that the company is dealing with the issue with utmost urgency even as the first quarter earnings of Citigroup increased recently.

Posted by James Fried on Wednesday April 16 2014, 2:23 AM EST. Ref: USA Today. Link. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0