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One-time gain bolsters Citigroup One-time gain bolsters Citigroup
(about 2 hours later)
Citigroup and Bank of America have reported better-than-expected quarterly profits, but both warned that losses on consumer loans were likely to continue.Citigroup and Bank of America have reported better-than-expected quarterly profits, but both warned that losses on consumer loans were likely to continue.
Citigroup made $4.28bn in the April-to-June quarter after a loss of $2.5bn a year earlier, helped by a one-off gain.Citigroup made $4.28bn in the April-to-June quarter after a loss of $2.5bn a year earlier, helped by a one-off gain.
Bank of America said its profits slid 5.5% as customers fell behind with credit card and mortgage payments.Bank of America said its profits slid 5.5% as customers fell behind with credit card and mortgage payments.
BoA and Citigroup's corporate report cards follow forecast-beating earnings from Goldman Sachs and JP Morgan.BoA and Citigroup's corporate report cards follow forecast-beating earnings from Goldman Sachs and JP Morgan.
Citigroup profits were boosted by a one-off gain of $11.1bn from the sale of its Smith Barney brokerage, but warned its core banking operation still faced problems.Citigroup profits were boosted by a one-off gain of $11.1bn from the sale of its Smith Barney brokerage, but warned its core banking operation still faced problems.
US BANK PROFITS Goldman Sachs: $3.44bnJP Morgan: $2.72bnBank of America: $3.2bn Citigroup: $4.28bn US banks are not cured yet
"Our most significant challenge now remains consumer credit," said Citigroup chief executive Vikram Pandit."Our most significant challenge now remains consumer credit," said Citigroup chief executive Vikram Pandit.
"Losses in our consumer businesses have been growing for some time, but we see some positive signs of moderation in those loss trends," he added."Losses in our consumer businesses have been growing for some time, but we see some positive signs of moderation in those loss trends," he added.
Citigroup has received a $45bn bail-out from the US government.Citigroup has received a $45bn bail-out from the US government.
Walter Tood, a portfolio manager at Greenwood Capital, said the results were a "mixed bag".
"They both seem to reserve a lot for credit losses in all parts of the business. That's the bad news," he said.
"The good news is the bank earnings looked really strong, which should be the case."
'Difficult challenges''Difficult challenges'
BoA said net profit totalled $3.2bn (£2bn) in the April-to-June quarter, compared with $3.4bn a year earlier.BoA said net profit totalled $3.2bn (£2bn) in the April-to-June quarter, compared with $3.4bn a year earlier.
But the fall was much less than Wall Street analysts had expected, helped by strong gains in trading fees.But the fall was much less than Wall Street analysts had expected, helped by strong gains in trading fees.
BoA chief executive Kenneth Lewis warned that the bank was not yet out of the woods.BoA chief executive Kenneth Lewis warned that the bank was not yet out of the woods.
"Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality," Mr Lewis said."Difficult challenges lie ahead from continued weakness in the global economy, rising unemployment and deteriorating credit quality," Mr Lewis said.
Bank of America took over investment bank Merrill Lynch at the height of the financial crisis last October and was bailed out by the US government.Bank of America took over investment bank Merrill Lynch at the height of the financial crisis last October and was bailed out by the US government.
The bank was told by the US government earlier this year that it needed to raise $33.9bn - more than any other US bank - in order to weather the crisis.The bank was told by the US government earlier this year that it needed to raise $33.9bn - more than any other US bank - in order to weather the crisis.