(New York, USA) - US banking giant Citigroup Monday reported a handsome 30 percent jump in year-over-year profits, but expressed caution over the housing market and the state of the economy.
Citigroup reported net income of $3.8 billion on revenues of $20.5 billion in the first quarter of 2013, up from $2.9 billion on $19.4 billion in the year-ago quarter.
The results were boosted by higher revenues, stronger investment banking and lower net credit losses.
Still executives offered a cautious outlook on the economy. Consumers remain hesitant to spend, said chief financial officer John Gerspach.
"I don't think we've got what I would call a real confident consumer driving the economy," he said in a conference call.
Gerspach said current forecasts for 2.5 percent gross domestic product growth in 2013 were not consistent with a "vibrant, healthy" economy.
A key driver of the earnings in comparison to the year-ago period was lower net credit losses, the ratio of current credit related losses on a mortgage-backed security to the original value of the security.
Citi reported losses of $3 billion in this category whereas it reported $4.0 billion in the year-ago period.
Citi also posted a solid 22 percent increase in investment banking revenue compared with the year-earlier period.
But it reported a one percent drop in North American consumer banking revenues, while international consumer banking revenues rose three percent.
Echoing comments from JPMorgan Chase, which last week pointed to the caution of some businesses about making new investments, Gerspach observed "sideways" growth when it comes to the consumer.
Spending growth is "uneven," Gerspach said. "I still think we're going through a certain amount of deleveraging."
The banking giant saw improvement in some housing-related benchmarks. The bank currently has $6.1 billion worth of residential mortgage and equity loan delinquencies, down from $8.6 billion in the year-ago period.
Citi released $652 million in reserves in case of loan losses -- a figure that includes reserves kept in case of bad mortgage loans.
Despite some improving data on housing, "I wouldn't say I'm positive about the housing market," Gerspach said.
One of the harder-hit banks during the 2008 banking crisis, Citigroup shook up its leadership last fall, replacing Vikram Pandit with Michael Corbat as chief executive.
Citi's earnings come on the heels of results from competitors JPMorgan and Wells Fargo last week that disappointed the market. Large banks are contending with a difficult business environment due to low interest rates.
"During the quarter, we benefited from seasonally strong results in our markets businesses, sustained momentum in investment banking, continued year-over-year growth in loans and deposits in Citicorp, and a more favorable credit environment," said Corbat.
"However, the environment remains challenging and we are sure to be tested as we go through the year."
Citigroup shares were up 1.6 percent at $45.50 in midday New York trade.
