For Citigroup, at "death's door" just a couple of years ago, it was nice to report a profit, even one that fell 32% from a year ago.  Earnings came in at $3 billion, which nonetheless beat analyst expectations.  Last year's earnings of $4.4 billion was the bank’s first profitable quarter since the financial crisis.

Citi's numbers were helped by the release of $3.3bn of reserves that previously had been set aside to cover credit card and other loan losses.  However, the bank incurred deeper losses in its domestic mortgage unit and weaker trading and investment banking results.  And unlike previous quarters, when strong results overseas helped lift earnings, nearly every major region and business except Latin America experienced a slowdown.  Over all, Q1 revenue fell 22%, to $19.7bn.  Expenses also increased by 12%, to $9.6bn.  CEO Vikram Pandit said he was pleased:  "Our core businesses performed well despite the difficult economy.  We’ve come a long way - and we continue to move forward.  I’m excited that we are carrying 2010’s strong momentum into this year." 

He's expected to give more details on Thursday, when he addresses investors at Citigroup’s annual shareholder meeting.  The bank also is planning a 10-for-1 reverse stock split early after the close of business on 5/6 that will almost certainly draw criticism from stockholders.

In any case, Citigroup’s earnings were tempered by the same factors that weighed on the results reported last week by Bank of America and JPMorgan Chase.

Citi is close to completing its plan to shrink its balance sheet.  The last big piece that remains is CitiFinancial, its large consumer lending franchise, which is on the block.  Several private equity firms are in the final stages of bidding for the group.  Federal regulators acknowledged Citi’s progress when they approved Mr. Pandit’s plan to reinstate the dividend at a token 1/10th of a penny a share.  But unlike several major competitors that announced large share buyback programs, Mr. Pandit has said that the bank is unlikely to do so until sometime in 2012.

        Investment Banking Group.   Growth continues to be challenging across all divisions.  Citigroup’s investment banking group has been inconsistent, and it underperformed in almost every major business category.   The unit’s Q1 profit fell 46% to $1.7bn from a year earlier, when the trading environment was unusually strong.  Investment banking income dropped 18% as a result of a slowdown in deal advising as well as a falloff in stock and bond underwriting fees.  Trading revenue from its fixed income, commodities and currency group, which long buoyed the bank’s growth, dropped 29%.  Trading revenue from equities decreased by 19%.   [Bloomberg, 4/18]