17 10 / 2011
UPDATE 5-Citi posts higher earnings but warns on growth
* Asia revenue rising, helped by retail business* Non-accrual loan portfolio shrinks* Shares down 1 percent in afternoon tradingBy Joe RauchOct 17 (Reuters) - Citigroup Inc reported higher
quarterly earnings, helped by an accounting gain, but warned
that developed markets could face weak growth for years, and
the bank’s shares fell.Stripping out the accounting gain, third-quarter earnings
were better than expected, and Citi’s stock rallied initially.
But shares later weakened after senior bank executives sounded
cautious notes on the economy and lending margins.Like its rivals, Citigroup was hit by the European debt
crisis and the sluggish U.S. economy. Investment banking fees
dropped and its loan book fell 2 percent. Operating expenses
rose, in part because of investments made to boost its
business.Chief Executive Vikram Pandit is trying to turn the bank
around after the financial crisis by focusing on emerging
markets, where economies are still growing relatively quickly.
The weak U.S. economy also weighed on results at JPMorgan Chase
& CoWells Fargo & Co .”In the developed markets, growth is likely to be slow for
years,” Pandit said in a conference call with analysts.He also said the U.S. housing market remains the “greatest
risk” that domestic banks face.Chief Financial Officer John Gerspach said the bank’s net
interest margin is expected to decline by “a couple of basis
points” in upcoming quarters, absent a significant portfolio
sale.Overseas growth has helped Citigroup in recent quarters,
but there are early signs of difficulties in its emerging
markets business. For example, retail loan volume in Latin
America dropped 7 percent in the third quarter from the second
quarter.Citigroup, the third-largest U.S. bank by assets, reported
net income of $3.77 billion, or $1.23 per share, up from $2.17
billion, or 72 cents per share, a year earlier.The latest results included a pretax gain of $1.9 billion,
or 39 cents per share after taxes, due to the bank’s widening
credit spreads during the quarter. When a bank’s debt weakens
relative to U.S. Treasuries, it can record an accounting gain
because it could profit from buying back debt.Excluding that gain, Citi earned $2.6 billion, or 84 cents
per share. Analysts’ average forecast was 81 cents per share,
according to Thomson Reuters I/B/E/S.In afternoon trading, Citi shares were down 29 cents, or 1
percent, to $28.11. They rose as high as $29.48 in morning
dealings.INVESTMENT BANKING HITLike JPMorgan, Citigroup’s investment banking business was
hurt when European market turmoil made companies reluctant to
buy competitors or issue securities.Revenue at Citi’s continuing securities and banking
business fell 12 percent excluding the debt value adjustment,
to $4.84 billion.Overall operating expenses rose 8 percent from a year
earlier. Operating expenses were $12.46 billion and have been
hovering around that level since the fourth quarter of 2010.
From the beginning of 2009 through the third quarter of 2010,
quarterly operating expenses were typically closer to $11.9
billion.Citi, which received three U.S. government rescues at the
height of the financial crisis, is seeing its problem loan
portfolio shrink.Nonaccrual loans fell to $7.95 billion in the third quarter
from $12.46 billion a year earlier.The bank’s share price has fallen about 40 percent this
year, in line with declines for other large banks.
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17 10 / 2011
Another reason baseball is Americas game?
A speaker at the influential Values Voters Summit had a theory about why there has not been a major attack on U.S. soil by Islamic extremists since Sept. 11, 2001. And it isnât just the hard work of U.S. intelligence agencies or the efforts of the thousands of U.S. forces who have risked their lives for 10 years.
According to Bryan Fischer, a director of the evangelical Christian American Families Association, baseball can take at least some of the credit.
Fischer told an audience at the meeting that he believes there has not been another such major attack on the United States for a decade because Major League Baseball started singing âGod Bless Americaâ during the seventh-inning stretch break during games instead of âTake Me Out to the Ballgameâ after 9/11.
By singing âGod Bless America,â baseball audiences are praying, and God has been hearing their prayers, Fischer said.
âMajor League Baseball has converted our stadiums into cathedrals,â he told the summit, a gathering of the socially conservative voters who will play a large role in selecting the Republican Partyâs nominee to run against President Barack Obama as he seeks re-election in 2012.
All of the leading nominees for the Republican nomination describe themselves as conservative and all of them agreed to address the convention. Texas Congressman Ron Paul and former Massachusetts Governor Mitt Romney addressed the meeting on Friday, before Fischer spoke.
PICTURE CREDIT: Men in colonial costumes wave their hats at the Values Voters Summit in Washington, October 7, 2011.
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