Citigroup reported a massive jump in profit on lower costs; Wells Fargo profits fell in the last quarter as it set aside more money to cover bad loans. Bobbi Rebell reports.
Citigroup reported a massive jump in quarterly profit-beating forecasts. Legal costs plunged and the bank also got a boost from selling some assets from its Citi Holdings portfolio. The number three U.S. bank by assets has been restructuring to focus on more profitable businesses and returning capital to shareholders. That effort is paying off according to Drexel Hamilton's David Hilder: "The main feature is that Citi continues to reduce its expenses and improve its efficiency. Although some of their trading revenues were down from the third quarter, they were up from last year's 4th quarter. And their investment banking franchise is intact, producing $1.1 billion of revenue in the quarter. " Hilder has a buy rating on that stock and on Wells Fargo. That bank, the biggest U.S. residential mortgage lender, reported a near one percent fall in profit. Overall earnings were in line with forecasts. Wells Fargo set aside more money to cover bad loans. The bank is a major lender to the energy industry, which has been battling plunging oil prices. Mortgage banking revenue rose close to 10 percent. It was the first rise in three quarters.