Citigroup earns $4.4 billion in first quarter

NEW YORK (AP) — Citigroup Inc. provided more evidence that America’s big banks may have turned a corner. The bank reported a surprise first-quarter profit Monday as trading revenue offset losses from failed loans.

Citigroup said it earned $4.4 billion after payment of preferred dividends, compared with a loss of $696 million a year earlier. That was the bank’s biggest quarterly profit since the second quarter of 2007.

The company cited strong trading of bonds, stocks and other securities for its big profit. Citigroup, one of the hardest hit banks during the credit crisis and recession, said losses from bad loans fell for the third consecutive quarter. It also set aside less money for loan losses.

“Loan losses coming down with growth of top-line revenue speaks to the overall recovery,” said Oliver Pursche, executive vice president at Gary Goldberg Financial Services. Pursche a co-portfolio manager of the GMG Defensive Beta Fund, which holds shares in Citigroup, but is not currently buying shares.

Citigroup earned 15 cents per share on revenue of $25.4 billion.

That easily beat analysts expectations of a slight loss, according to Thomson Reuters.

Citigroup’s strong showing follows similarly impressive results last week by Bank of America Corp. and JPMorgan Chase & Co. That has boosted hopes that the worst of the credit crisis has passed and banks may be entering a period of sustained profitability.

Yet CEO Vikram Pandit sought to dampen short-term expectations for Citigroup, saying the bank remained cautious “given the uncertain economic recovery and high unemployment in the US”

“Realistically, we do not expect our performance to follow an invariable trendline upward,” he said. “Longer-term, however, the prospects for Citigroup are clear and bright.”

Pandit sounded a little less upbeat about the economy than his counterparts at JPMorgan Chase and Bank of America. But Citigroup’s recovery from the devastation of the financial markets has been more difficult.