Earnings: Citigroup | Knight Ridder | Wachovia

Citigroup Sees Profit Rise 4%

NEW YORK (Reuters) - Citigroup Inc. (C) Monday said first-quarter profit rose 4 percent as record revenue from non-U.S. operations and from fixed-income trading and investment banking offset weakness in U.S. consumer banking operations.

Net income for the largest U.S. bank rose to $5.64 billion, or $1.12 per share, from $5.44 billion, or $1.04 a share, a year earlier.

Profit from continuing operations, excluding insurance and mutual fund units that were sold last year, rose 9 percent to $5.56 billion.

Results included a $520 million after-tax charge to expense stock options, and a $657 million benefit to resolve a federal tax audit for the 1999 to 2002 years.

Revenue from continuing operations rose 5 percent to $22.18 billion.

Citigroup said it authorized the buyback of up to $10 billion of stock. It had set a $15 billion buyback last April.

"We are seeing the benefits from our investment spending, which helped generate record revenues" in non-U.S. and corporate and investment banking units, Chief Executive Charles Prince said in a statement. "Strength in these franchises more than offset weaker results in our U.S. consumer business."

Citigroup won a victory when the Federal Reserve this month lifted its yearlong ban on big acquisitions, citing the bank's improved internal controls following several regulatory scandals. Prince has been focusing on improving Citigroup's existing businesses, rather than adding new ones.

In the United States, earnings fell 13 percent and revenue declined 1 percent, while internationally, profit rose 47 percent and revenue rose 19 percent.

Shares of New York-based Citigroup closed Thursday at $48.05 on the New York Stock Exchange. The stock had fallen 1 percent this year, compared with a 3 percent gain in the Philadelphia KBW Bank Index.

TRADING PROFITS

Corporate and investment banking profit rose 15 percent to $1.93 billion, helped by record results in emerging markets trading, municipal bonds and credit products. Revenue from equity markets surged 67 percent, fixed income rose 8 percent, and investment banking rose 34 percent, all to records.

In Citigroup's largest business, consumer banking, profit rose 8 percent to $3.07 billion globally, but fell 4 percent in the United States. Net interest margin narrowed 0.06 percentage points from the fourth quarter, but U.S. consumer bankruptcy-related losses fell from an elevated fourth-quarter level.

Profit from alternative investments fell 2 percent to $353 million, and wealth management declined 10 percent to $287 million. Assets rose 6 percent to $1.59 trillion.

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Knight Ridder Earnings Tumble

NEW YORK (Reuters) - Knight Ridder Inc. (KRI), the newspaper publisher being acquired by McClatchy Co., said Monday first-quarter earnings fell 53 percent as stock-based compensation and sale-related expenses undercut profits.

Net profit fell to $28.4 million, or 42 cents a share, from $60.5 million, or 79 cents a share, a year earlier.

Stock-based compensation depressed first-quarter earnings by 5 cents per share, and sales-related expenses knocked 6 cents off the bottom line.

A 12 percent decline in national ad revenue also dragged on earnings.

Analysts, on average, expected the company to earn 59 cents a share, according to Reuters Estimates.

Operating revenue rose 4 percent to $740 million.

"The quarter was challenging," Tony Ridder, chief executive officer of Knight Ridder, said in a statement. "With total ad revenue up only 1 percent, and with the persistence of the soft revenue patterns across the industry for many months now (employment and real estate excepted), we continue to look to the second half for improvement."

McClatchy agreed in March to buy Knight Ridder for about $4.5 billion and would become the second largest U.S. newspaper chain.

McClatchy has said it plans to sell off 12 of its slower-growth newspapers, including marquee titles San Jose Mercury News and Philadelphia Inquirer.

Wachovia Earnings Rise

NEW YORK (Reuters) - Wachovia Corp. (WB), the No. 4 U.S. bank, on Monday said first-quarter profit rose 7 percent, helped by growth in fees.

Net income for the Charlotte, North Carolina-based company rose to $1.73 billion, or $1.09 per share, from $1.62 billion, or $1.01 a share, a year earlier.

Excluding merger and restructuring charges, profit was $1.12 per share. On that basis, profit matched the average forecast among analysts polled by Reuters Estimates.

Results included a $100 million termination fee that MBNA Corp. paid to sever a joint marketing agreement with Wachovia. Bank of America Corp. (BAC) bought MBNA for $34.2 billion, and Wachovia has reentered the credit card business.

Revenue rose 9 percent to $7.06 billion, topping the average forecast of $6.9 billion. Fee and other income rose 17 percent, Wachovia said.

Profit from consumer and business banking rose 21 percent to $1.11 billion, while profit from corporate and investment banking rose 3 percent to $519 million. Profit rose 24 percent in capital management and fell 5 percent in wealth management.

Expenses rose 9 percent to $4.24 billion, reflecting acquisitions, employee incentives and $98 million to expense stock options. Chief Executive Ken Thompson plans to save $1 billion by 2007, in part by cutting 3,500 to 4,000 jobs.

Wachovia shares closed Thursday at $55.85 on the New York Stock Exchange. The shares have risen 6 percent this year, compared with a 3 percent gain in the Philadelphia KBW Bank Index.

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