Citigroup earnings miss estimates on bond trading, mortgages

Citi Holdings

Citigroup continued winding down and selling investments in the Citi Holdings unit, which contains a consumer-finance business and billions of dollars of U.S. mortgages. Assets in the division fell 6.9% from the second quarter to $122 billion. Losses at the unit, created in 2009 as a home for the company’s unwanted assets after the financial crisis, narrowed to $104 million from a $570 million loss in the second quarter.

Corbat replaced Vikram Pandit, 56, as CEO in October 2012, after Pandit navigated the bank around a near collapse and repaid a $45 billion U.S. bailout. Since taking over, Corbat has said he would cut 11,000 workers and pull back from consumer banking in markets such as Uruguay, Turkey and Pakistan.

The lender is seeking buyers for 50 Texas branches and plans to sell and lease back an additional 90 in California as it focuses on the biggest urban areas, people with direct knowledge of the moves said in August. Corbat, who previously led the Citi Holdings unit, is looking to cut costs by $900 million this year.

Wells Fargo

The third-quarter results compared with a $5.58 billion profit reported last week by Wells Fargo & Co., and a $380 million loss for JPMorgan, the first under Chief Executive Officer Jamie Dimon. The New York-based firm took a $7.2 billion charge to cover the cost of mounting litigation and regulatory probes.

Corbat won praise from Sanford “Sandy” Weill, the former chairman and CEO, and Michael Mayo, an analyst at CLSA Ltd. who had spent the past five years telling investors to sell the shares. Weill said in a Sept. 10 interview on CNBC that he’s “finally happy” with management, calling Corbat “terrific.”

In March, the Fed approved Citigroup’s capital plan after the bank outperformed JPMorgan and Goldman Sachs Group Inc. on key measures in an annual stress test of U.S. lenders in a hypothetical slowdown.

“These are the results that will be used in the CCAR stress test in March,” Cassidy said, referring to the Fed’s Comprehensive Capital Analysis and Review tests. “We should see them increase their dividend very sizably in March and also a big buyback,” he said.

Fed Chairman Ben S. Bernanke said May 22 that the central bank may begin slowing, or “tapering,” the $85 billion in monthly bond purchases it has conducted to help boost the economy. The talk led economists to predict the pullback would be announced in September though officials surprised investors by saying Sept. 18 they would maintain purchases.

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