Citigroup profit drops after it writes down brokerage unit

Reuters

Citigroup Inc said quarterly profit plunged on a $4.7 billion write-down of its stake in a brokerage operated by Morgan Stanley, but mortgage lending increased and capital markets results rebounded.

The New York-based global bank on Monday said third-quarter net income was $468 million, or 15 cents a share, compared with $3.77 billion, or $1.23 a share, a year earlier.

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Adjusted earnings, excluding the previously announced write-down and an accounting charge for the change in the value its debt, was $3.27 billion, or $1.06 cents a share, compared with $2.57 billion, or 84 cents a share, a year earlier.

It was not immediately clear if the adjusted results were comparable to analysts' average estimate of 96 cents per share found in surveys by Thomson Reuters I/B/E/S.

The adjusted results also included a benefit of 19 cents a share for the resolution of tax audit items.

The bank said profits from the Securities and Banking unit increased 67 percent on stronger revenue from fixed income and equity markets and lower expenses. The North American Consumer Banking segment saw an 18 percent increase in profits on higher mortgage revenues.

Results outside the United States were generally weaker, with income from International Consumer Banking down 3 percent, and profits in transaction services provided to businesses and governments outside North America down by single-digit percentages.

In September Citigroup agreed on a price to sell its 49 percent interest in the brokerage to Morgan Stanley. At the time, it said it would take a charge to reduce its carrying value for the asset by about 40 percent.

The joint venture was created in the financial crisis in 2009 as a way for Citigroup to shrink by transferring its Smith Barney brokerage assets to Morgan Stanley. (Reporting by David Henry in New York; editing by John Wallace)