Citigroup (C) reported better results because it is not losing as much money to credit defaults. Can you believe that? The mortgage market is a mess. Documentation errors abound. The consumer is still in big trouble. Unemployment is high. But Citigroup says they are not losing as much money because defaults are down.
Take a look at the geographical spread of defaults. The write-offs continue in non US jurisdictions. The earnings release points to lower taxes in more tax efficient jurisdiction. So if you slice dice and securitize product and move it to high tax jurisdictions to take the write-offs Hmm Maybe even hid them as losses in securities trading and not outright credit losses Hmm
The devil is in the details. In the very fine print that is hard to follow.
Disclosure: George Gutowski writes from a caveat emptor perspective: I hold no positions in stocks mentioned in this post.
- Citigroup 3Q Profit Rises, But Revenue And Trading Fall (huffingtonpost.com)
- Citigroup earns $2.15 billion in 3rd quarter (seattletimes.nwsource.com)
- Citigroup Reports Third Quarter 2010 Net Income of $2.2 Billion; $0.07 Per Share (eon.businesswire.com)
- Citigroup profit tops expectations (theglobeandmail.com)
- Citigroup: Here’s a Good Sign for Banks (blogs.wsj.com)