After a year of straight losses and government bailouts, the banking giant Citigroup has reported a profit in their first quarter earnings report. After Citi posted a $5.1 billion loss in their first quarter of 2008, they’re getting good results so far in 2009 with $1.6 billion in profit and revenues up 99%.
This has been the best quarter for Citigroup since the second quarter of 2007. Citi was helped by reducing its expenses by nearly 25% and a new accounting rule that let them post a gain of $2.5 billion due to declines in market value of their debt.
It looks like the American banking system may be regaining its strength thanks to the government bailouts. The Citi earnings results are an additional positive note after banks such as JP Morgan Chase, Goldman Sachs, and Wells Fargo all reporting profits in their first quarter of 2009.
JP Morgan’s chairman recently announced that the company will pack back $25 billion in bailout money as soon as the government will allow them to. With ultra low interest rates, more people have been applying for mortgages and we’ve seen the credit market start to emerge from a deep freeze.
Still, banks are weary of their futures. Most realize there are still troubled waters ahead, but perhaps the worst is behind us. Citigroup shares have risen 16.7 so far in premarket trading. We’ll see how the market reacts to this news at opening.