After a slump and a global restructure, Citigroup looks for a rebound

Sydney Morning Herald

Friday April 1, 2011

Eric Johnston

A SLUGGISH year for investment banking curbed profit growth for the Australian operations of the US giant Citigroup, although local executives are tipping a rebound this year, particular as its parent is no longer in the recovery ward.With investment markets rebounding, Citigroup's top executive in Australia, Stephen Roberts, said the bank was again poised to compete after its global restructure."We have become fit," Mr Roberts told BusinessDay. "Our business was rationalised as a result of financial disruption but we were compelled to become more efficient and more responsible. As I look at our business today, I look at the platform. I have to say I feel better about it than at any time in its history."One of the biggest international banks in Australia, Citigroup's combined operations posted a profit of $165 million last year. This was down from $198.5 million in 2009.In Australia, Citigroup's business spans two areas. The biggest profit driver is retail banking, which provides mortgages and business loans and is also a specialist in credit cards. Its other operations are based on corporate lending and investment banking businesses.Citgroup's stockbroking and investment banking business swung into a loss of $96 million for the year, compared with a $16.9 million profit a year earlier.Volatile markets kept revenue in equities, fixed income and investment banking under pressure. And spending on investment across the business pushed up outgoings.The retail banking arm made a net profit of $261 million last year. This was up sharply from $181.6 million a year earlier. Earnings were boosted by an improvement in margins - more loans were funded by deposits and losses on bad loans fell away.The retail bank lending book shrunk slightly to $13.5 billion from $14 billion a year earlier.In January Citigroup handed down a global profit of $US10.6 billion on the back of fewer losses from soured loans - the first time it had posted a full-year profit since 2007.Citigroup reported a loss of $US1.6 billion in 2009 and a crippling US$18 billion loss in 2008.The profit rebound underscored one of Wall Street's more improbable comebacks. As the financial crisis unfolded, Citigroup needed three US government bailouts to head-off collapse.