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Citigroup Posts Decline in Third-Quarter Net Income

""Citigroup"":http://www.citigroup.com/citi/ reported a net income of $468 million, or $0.15 per share, for the third quarter of 2012, down from $3.8 billion in the same quarter a year ago.


Citi reported the third quarter results included a pre-tax loss of $4.7 billion after Citi decided to sell off its remaining stake in Morgan Stanley Smith Barney (MSSB) to Morgan Stanley. MSSB, a retail brokerage, is a joint venture between Citigroup and Morgan Stanley formed in 2009.

In addition, Citi reported a negative credit valuation adjustment (CVA)/debt valuation adjustment (DVA) of $776 million in the third quarter, compared to a positive $1.9 billion last year.


Citi reported revenues of $14 billion in the third quarter. When excluding the MSSB loss and negative CVA/DVA adjustment, revenues were $19.4 billion, up 3 percent from the prior quarter and up 26 percent from the same period a year ago.

In a release, Vikram Pandit, Citi's CEO, said, ""Last month's price agreement on MSSB has given us more certainty on our exit from that business and added to the reduction of Citi Holdings, which is now only 9% of our balance sheet. We generated additional capital during the quarter and our Tier 1 Common Ratio was estimated at 8.6% on a Basel III basis at the end of the period. We are managing risk very carefully given global economic conditions so we can continue to grow our businesses safely and soundly.""

The bank's North American consumer banking revenues improved 6 percent from the previous year to $5.4 billion due to higher retail banking revenues. However, consumer banking revenues were partially offset by international consumer banking revenues, which fell 2 percent to $4.8 billion.

Higher mortgage revenues helped the bank see retail banking revenues increase 35 percent to $1.7 billion from the third quarter of 2011.

The bank also reported about $635 million in incremental mortgage charge-offs, which was substantially offset by a reserve release of about $600 million.

About Author: Esther Cho


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