Tomahawk, WI 10/17/2013 (BasicsMedia) – Lately, the U.S largest banks have struggled to post stellar financial results. Citigroup Inc (NYSE:C) is the latest one to join the fray. The financial results it has released are understandable if you consider the current conditions. The mortgage sector has been the worst hit for a number of reasons, chief of which is the government shutdown and high interest rates. Against such situation, Citigroup and other large U.S banks were always going to struggle to post stellar results. The revenues Citigroup was expecting from the U.S. failed to materialize.

 Citigroup’s Net Income Rises to $3.2 billion

However, while it was expected that Citigroup would struggle to post positive financial results for the third quarter, it was encouraging to note that it earned profits of $3.2 billion. This is a huge improvement from a similar period in 2012, when Citigroup’s profits were not more than $468 million. The reason why analysts and investors are not excited about the profits that Citigroup reported is that it was much lower than what they projected. Analysts had said they believed Citigroup’s revenues for the third quarter would be more than $18.77 billion.

The main reason why Citigroup’s profits and revenues were below what analysts and investors were expecting is due to the poor mortgage industry. Things are not going too well for this sector and most U.S large banks, such as Citigroup, Bank of America, and JPMorgan Chase & Co are struggling to post positive results that impress analysts and investors alike. This time round, the company only raised revenues totaling $17.9 billion. Revenues were higher than those posted during the same quarter in 2012, which were $13.7 billion, although it still underperformed.

Citigroup’s Cost Cutting Measures Bearing Fruit

Citigroup’s loan loss reserve release for the third quarter of 2013 stood at $675 million. Last year, at a time such as this, the company’s loan loss reserve release was $1.5 billion. Citigroup’s net credit losses have also reduced by close to 38% compared to 2012. It appears that Citigroup is doing quite well on cost cutting measures. It has reduced the amount of money it spends on various items. What it needs to work more on, is to improve its ability to earn higher revenues than it did this quarter. It has to find ways of compensating the losses from mortgage sector.

The bank’s net income of $3.2 billion may appear impressive. However, it is much lower than what the industry was expecting, $3.5 billion. It is worth pointing out, and the company’s CEO rightly mentioned it, that the U.S government shutdown played a significant role in reducing Citigroup’s revenues. Some emerging markets also experienced a slowing down of their economies and this had a bearing on Citigroup’s finances. The actions that Federal Reserve may or may not take also played a part in reducing what was expected to be brilliant results.

Based on these figures alone, one would say that the bank failed to achieve its goals. It did not announce results that please or impress either investors or Wall Street analysts. Nevertheless, it did not do too badly bearing in mind the kind of environment it surrounding the industry.

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