Citigroup profit rises on narrower loss from troubled assets

Matthew J. Belvedere and Reuters
Citigroup's 'clean beat'

Citigroup's quarterly net profit rose 4 percent as a narrower loss on its troubled assets made up for a drop in revenue and profit from its core trading and lending businesses.

First-quarter adjusted net income rose to $4.15 billion, or $1.30 per share, from $4.00 billion, or $1.29 per share, a year earlier, the third-largest U.S. bank said on Monday. The consensus forecast had called for $1.14 per share.

"It's a pretty clean beat," said David Hilder, banking analyst at Drexel Hamilton. "The company is fully capitalized and had a pretty good quarter."

After the earnings announcement, the company's shares rose in premarket trading. (Click here to get the latest quotes for the bank.)

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The adjusted net loss from Citi Holdings, which holds the bank's portfolio of troubled assets left over from the financial crisis, eased to $292 million from $798 million a year earlier.

"It is dragging around a certain amount of capital and assets that are not terribly productive, not really producing earnings," Hilder said Monday on CNBC's "Squawk Box."

In the company's core business, known as Citicorp, net income fell 8 percent and revenue fell 5 percent because of a decline in revenue from bond trading and home mortgage lending.

"There was less revenue, especially in fixed income trading, about 18 percent year over year," Hilder added.

For all of Citigroup, adjusted revenue dropped 2 percent to $20.1 billion, beating the average analyst estimate of $19.4 billion.

The first-quarter results were hit by higher legal costs. During the quarter, the company announced that it was investigating a $400 million loan fraud in its Mexico subsidiary.

Total net income under generally accepted accounting principles rose to $3.94 billion, or $1.23 per share, from $3.81 billion, or $1.23 per share, a year earlier.

The Citigroup numbers put the financial sector in a better light, after JPMorgan Chase's lower-than-expected profit and revenue helped send the overall stock market sharply lower Friday.

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"I think a lot of the negative sentiment on banks may turn around in the next few days," Hilder said. "JPMorgan is a very strong bank. And I think the stock is undervalued today."

By CNBC's Matthew J. Belvedere. Reuters contributed to this report.