Citigroup 3Q profits plunge
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October 8, 1998: 11:03 a.m. ET
Financial conglomerate blames global turmoil for 53 % drop in earnings
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NEW YORK (CNNfn) - Financial services conglomerate Citigroup Inc. said Thursday it was hit hard by global market turmoil in the third quarter, with earnings expected to drop 53 percent from last year.
The New York-based company, formed when Travelers Group Inc. and Citicorp. merged in a $70 billion deal, will have net income of approximately $700 million.
For the same period last year, the two predecessor companies reported pro forma net income of $1.5 billion. Excluding a 1997 restructuring charge, net income was $2.1 billion.
Salomon Smith Barney, Citigroup's securities arm, will report a net loss of about $325 million. The firm blamed after-tax losses of approximately $700 million resulting from global arbitrage and Russia credit losses, many of which were previously announced.
Citibank's corporate banking unit will report a net loss of approximately $130 million due to after-tax losses of $240 million related to Russian turmoil, as well as $100 million related to marking to market fixed income inventories.
The company said venture capital and sales of Brady bonds, which have contributed significantly to earnings in past quarters, were flat.
Shares of Citigroup (CCI) dropped 1-3/4 to 30 on the New York Stock Exchange in early trade.
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