CITI RECORDS FIRST PROFIT IN SIX QUARTERS

Citigroup reported its first profit in six quarters, joining rivals in benefiting from a rise in trading activity.

The US bank said on Friday it made a net profit of $1.6bn compared with a net loss of $5.1bn a year earlier, marking its highest earnings since the second quarter of 2007. Revenue doubled to $25bn amid a boom in trading fixed income and equities. Writedowns of toxic assets were a fraction of last year's in part because of a change in fair-value accounting rules.

The results beat market expectations and Citi shares were up 2 per cent at $4.09 in early trading.

“While we and the industry face challenges in the coming quarters as we work through the weak economy, we will remain focused on strengthening the Citi franchise,” Vikram Pandit, chief executive, said in a statement. “We will continue to reduce our legacy risk, aggressively manage expenses and improve efficiency.”

Citigroup, which needed billions of dollars in state aid after huge losses on mortgage-backed securities, in February agreed to give a 36 per cent stake to the government as part of its partial nationalisation.

Despite its return to net profitability, the bank recorded a loss per share of 18 cents, reflecting a reset in the price of convertible preferred stock in January. This compared with a loss of $1.08 a share in the first quarter of last year. The bank's Tier 1 capital ratio, a key measure of financial strength, was about 11.8 per cent, up from 7.7 per cent last year.