Retail strength aids B of A, Citigroup, profits

Eileen Alt Powell

Monday, April 14, 2003 | 11:20 a.m.

NEW YORK -- Buoyed by strong retail banking performance, Citigroup today reported first-quarter earnings above analysts' expectations.

Profits also rose at Bank of America Corp. of Charlotte, N.C., for the January-March period and were well above projections.

Citigroup, the nation's largest financial institution and owner of Citibank branches and a call center in Las Vegas, said net income totaled $4.1 billion, or 79 cents a share, in the first quarter. That was above the 77 cents expected by analysts surveyed by Thomson First Call.

The first-quarter results at the New York-based company compared with net income of $4.84 billion, or 93 cents a share, a year earlier. At that time, Citigroup still owned Travelers Property Casualty Corp., which it spun off last year.

Excluding the Travelers' income and a $47 million charge for an accounting change, income in the first quarter of 2002 was $3.48 billion, or 66 cents a share.

Citigroup Chairman and Chief Executive Sanford I. Weill said in a statement accompanying the report that he felt the bank was in "an exceptionally strong competitive position, which enabled us to deliver outstanding first quarter results despite an environment of significant political and economic uncertainties."

He noted that a number of business lines produced double-digit income growth, especially the global consumer division that includes credit cards and retail banking.

Weill said he expected further retail banking growth in the future in part because of the strong performance of Golden State Bancorp, which Citigroup acquired last November.

The only division to report a drop in income was private client services, with Citigroup said reflected lower fees and commissions amid weak market performance.

The bank said its reserves against losses were $11.6 billion for the first quarter, down $52 million from the fourth quarter.

Revenues totaled $18.54 billion in the first quarter, an increase of more than 4 percent from $17.8 billion a year earlier.

And fueled by a 21 percent increase in consumer loans, Bank of America reported first-quarter earnings of $2.42 billion, or $1.59 per share, up from $2.18 billion, or $1.38 a share, a year earlier.

That easily beat the $1.48 a share expected by analysts surveyed by Thomson First Call.

The Charlotte, N.C., bank -- the nation's No. 3 bank in assets behind Citigroup and J.P. Morgan Chase & Co. -- benefited from historic low interest rates on mortgages, which have boosted refinancings and home purchases.

Ken Lewis, chairman and chief executive, said that all three of the bank's major businesses increased profits in the first quarter.

Credit losses improved, the bank said, and its loan loss provision dropped to $833 million from $840 million a year earlier.

The bank began expensing employee stock options this quarter and reported a pretax impact of $26 million.

Revenue rose to $8.89 billion, up 3.5 percent from $8.59 billion in the first quarter of 2002.