We built this Citi on rock and roll.
Citigroup’s Q3 earnings increased by 71% as the bank set aside less money to cover bad loans and recorded a $1.9 billion accounting gain due to a widening of the bank’s credit spreads. Earnings came in at $1.23 per share, or $0.84 excluding the accounting gain, on revenue of $20.8 billion while analysts were looking for $0.81 on $19.25 billion. Investment banking fees fell as the European debt crisis cut into stock, bond and M&A activity. Overall revenue in the securities and banking business dropped 12% to $4.84 billion.
The $1.9-billion accounting gain was the result of widening credit spreads due to the company’s debt weakening versus U.S. Treasuries and was identical to an accounting adjustment JP Morgan (JPM) posted last week when it reported its Q3 results.
Separately, the New York Times reported on Sunday that Citigroup’s sale of the EMI Group is not going as well as expected. The bank was hoping to sell the unit for $4 billion after the Warner Music Group was sold for $3.3 billion earlier this year; however market concerns have kept potential bidders on the sidelines. According to sources close to the matter, bids have ranged $1-2 billion, well short of what the bank has been looking for.
Citigroup (C : NYSE : US$27.93), Net Change: -0.47, % Change: -1.65%, Volume: 80,308,960
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