Sudden Profitability for Citigroup Hints at Recovery and Growth

By Kyle Chezum Updated on 4/18/2011

In an unexpected and largely unusual turn of events, major banker and lender Citigroup reported earnings of $3 billion for the first quarter of 2011, showing an increase of over 100% in earnings from the previous quarter.  The reasons for this troubled bank's sudden growth?  An increase in mortgage lending, in part.

Citi reportedly originated $14.1 billion in mortgage loans during the previous quarter.  This number is an increase from last year's origination levels, which were 37% lower.  That's a startling jump.  But Citi isn't the only mortgage bank that has seen an increase in activity during the quarter.  Mortgage origination rates increased all across the nation during the first part of the year.

Citi's sudden profitability is a telling sign that change, whether good for homebuyers or bad, is in the air.  Quarterly revenues for the big bank are still down 22% from where they were last year at this time, but overall, the bank is much healthier at present than it has been since the start of the financial crisis.  The CEO of Citigroup, Vikram Pandit, claims the increase in profitability is the start of something big.

"As America's global bank, we are focused on supporting the real economy and creating opportunities for our clients to succeed," he said.  "Our sustained profitability has put us in a good position to accomplish our next goal of responsible growth."

Expansion?  It sounds like this may be the case.  If other banks report similar earnings, the lending market may begin to open up for business more broadly once again.