Citi results drained by lingering credit losses

NEW YORK (MarketWatch) -- Citigroup Inc. said on Thursday that its third-quarter loss per-share narrowed from the year-earlier period, aided by rising financial markets and an easing credit crisis, but the firm continued to take large provisions for debt losses. 
Citi reported third-quarter net income of $101 million, and a 27-cent loss per share, on revenue of $20.39 billion. In the year-ago quarter, Citi posted a loss of 61 cents a share on total revenue of $16.26 billion.

The company said the latest quarter's results included $8 billion in net credit losses and an $802 million net loan loss reserve build. 

"While consumer credit trends are improving in international markets, the U.S. consumer credit environment remains challenging," said Vikram Pandit, Citi's chief executive.

Analysts polled by Thomson Reuters had produced a mean estimate of a 36 cents a share loss during the quarter. Analysts' estimates for the results ranged from a high of just 2 cents a share loss, to a low of a $1.20 a share deficit. The firm, which is about 35%-owned by the U.S. taxpayer after the bank obtained $45 billion from the government's Troubled Asset Relief Program, said the allowance for loan losses rose to $36.4 billion, or 5.9% of total loans.

Tier 1 capital, an important measure of a firm's financial strength, climbed to 12.7% in the third quarter versus 8.19% a year ago.

"Looking forward, we will continue to focus on sustainable profitability and growth, repaying TARP and helping support America's economic recovery," Pandit said in the earnings release.

Citi shares were off 3% in premarket trading Thursday.

S&P MAINTAINS BUY OPINION ON SHARES OF CITIGROUP

(Standard & Poor's) Posts Q3 oper loss of $0.23, vs. $0.71 loss, $0.06 (previously said $0.10) below our est. Results include $0.18 loss from the conversion of preferred into common equity during the quarter. Net credit losses declined 5% sequentially signalling the worst of the credit downturn may be behind C. But we think it is too early to declare victory as ultimate credit losses will likely hinge on the success of loan modifications. Positively, capital seems adequate after the preferred exchange.