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 | | Thursday, 17 January, 2002, 16:48 GMT Citigroup posts record profits  Citigroup booms despite the global economic turmoil Citigroup, the world's largest financial services company, has reported record full year profits, as low US interest rates sparked a consumer borrowing and spending boom. Profits excluding one-off items were up 3% to $14.57bn even after the $1.8bn pre-tax impact of Enron's bankruptcy, Argentina's currency devaluation and the financial turmoil after 11 September. "Despite the continued global recession; Enron's bankruptcy, the largest in corporate history; and the severe economic turmoil in Argentina; Citigroup performed extraordinarily well in the fourth quarter," chairman and chief executive Sanford "Sandy" Weill said. The New York-based company earned $3.88bn in the October-to-December quarter, after the attacks, compared with $2.84bn in the year before. Patriotic profit? Eleven interest rate cuts in 2001 by the US Federal Reserve, to stave off a recession, and "patriotic spending" after the attacks helped Citigroup's consumer division record a 20% rise in profits in the quarter.
The low rates reduced Citigroup's borrowing costs and the stormy stock markets pushed people to deposit money in bank accounts, giving Citigroup cheap financing for loans. Profits at Citigroup's consumer arm, which includes credit cards and mortgage operations, rose to $2.03bn. Meanwhile the global corporate division, which includes its investment and corporate banking business, saw profits rise only 4% to $1.32bn. Writedowns related to Argentina held back the results. Citigroup was Wall Street's largest underwriter of stocks and bonds last year. Developing profits Apart from Argentina, where the currency devaluation forced Citigroup to take bond, foreign exchange and loan losses, the company made big gains from its expansion in developing countries. Profits at Citigroup's emerging markets business, including the corporate and consumer operations, rose 21% to $3.2bn. Citigroup runs banking, brokerage and insurance in more than 100 countries. | | See also:  Top Business stories now:  Links to more Business stories are at the foot of the page. | |||||||||||||||||||||
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