Finance News - part 5

Citigroup Profits Spike in Third Quarter

Citigroup Profits Spike in Third Quarter

FINANCE

  • Citigroup Q3 profits jump to $3.8 billion, exceed expectations
  • Bad loan losses drop 41% as consumers save, pay off debt
  • Citi Asia, Latin America report double-digit growth

Citigroup Inc. recorded a jump in third quarter profits of 74% to $3.8 billion, exceeding analyst predictions thanks to reduced losses on loans, overseas revenue growth and a $1.9 billion credit-valuation adjustment gain.

Third-quarter data marks seven consecutive quarters of income growth. A Bloomberg survey of 25 experts estimated an average earnings-per-share of 82 cents. When excluding the accounting benefit, earnings per share exceeded their predictions by 2 cents. Third quarter net income was $1.23 per share, up from $0.72 from the year-earlier period.

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Carrefour Stocks Fall 6%, Hit 2-Month Low

Carrefour Stocks Fall 6%, Hit 2-Month Low

FINANCE

  • Carrefour has cut its profit forecast twice over three months
  • Full-year operating income is expected to plummet between 15% and 20%
  • Competitor Casino sees third-quarter sales climb 20%

Retailer Carrefour saw its stock drop almost 6%, the most in nearly two months, having cut its 2011 profit predictions twice over a three month period. The company expects its full-year operating income to fall between 15% and 20% in 2011.

Carrefour, the second-biggest retailer in the world topped only by Wal-Mart Stores Inc., has forecast lower profit five times in 2011. The company is carrying out a plan to become more competitive, involving price adjustments and renovating some of its stores. One of its main competitors Casino Guichard-Perrachon SA has seen third-quarter sales rise more than 20%, due partly to growing Asian and Latin American markets.

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Ofgem Profits Questioned, Reform Sought

Ofgem Profits Questioned, Reform Sought

FINANCE

  • Ofgem's $197 profit figure raises energy suppliers' eyebrows
  • Regulator clarifies tariff structure to promote competition
  • Ofgem proposes minimum 20% of supplier power be auctioned by 2013

Energy suppliers are criticizing British energy regulator Ofgem for inconsistent profit figures, following Ofgem claims that its profit margin for energy firms increased from £15 ($23) in June to £125 ($197) in October.

The profit margin showed losses from 2004 to 2009, and as wholesale prices continue to rise, Ofgem expects margins to decline to roughly £65 ($102) by November. It also predicts a drop in profit to roughly £90 ($142) per customer for 2012.

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ASML Forecast: Semiconductor Chip Sector Slowdown Expected Despite Solid Q3

ASML Forecast: Semiconductor Chip Sector Slowdown Expected Despite Solid Q3

FINANCE

  • ASML Q3 revenue of €1.46 billion higher than forecasts
  • New orders in Q3 fall to €514 million; expected to rise in Q4
  • Record sales of over €5 billion expected for 2011

Computer chip equipment maker ASML published better than expected third quarter results Wednesday, but maintained predictions of a decline in the semiconductor industry. The Dutch company posted revenue of €1.46 billion ($2 billion), surpassing analysts’ forecasts of around €1.39 billion. Its net profits for the quarter were at €335 million, also higher than predicted.

New orders fell to around €514 million, representing a significant decrease for the world’s number one maker of photolithography equipment, which lays down electronic circuits on silicon wafers to create computer chips.

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Wall Street to Cut Bonuses, Jobs Upon Third-Quarter Data

Wall Street to Cut Bonuses, Jobs Upon Third-Quarter Data

FINANCE

  • Cash bonuses to drop as profit unlikely to reach $20 billion
  • New York City to endure 10,000 job loss in financial sector
  • Report suggests 4 to 6% lower ROE due to new regulations

Following weeks of protest, Wall Street cash bonuses and jobs are expected to be cut as revenue drops from a sluggish economy. 

Last year, cash bonuses were down 8% from 2009, with the average Wall Street cash award slidding 9% in 2010 to $128,500. New York Comptroller Thomas DiNapoli explained to Bloomberg Television that bonuses will be lower yet again because banks will have less money for award payments. His report suggests a slowdown in compensation growth during the second half of 2011 and a shift to larger salaries to compensate for smaller cash bonuses.

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Belgium to Nationalize Local Dexia Arm

Belgium to Nationalize Local Dexia Arm

FINANCE

  • €4 billion part-nationalization part of wider bailout plan
  • Belgium, France, Luxembourg agree 10-year, €90-billion guarantee
  • Shares drop 4.7% after suspension of trading

The Belgian government has agreed to buy the local lending unit of Dexia for €4 billion ($5.4 billion) as part of a wider rescue package for the struggling Franco-Belgian bank. The bailout plan comes after an earlier rescue package for the bank during the financial crisis and includes plans for a €90 billion ($121 billion) guarantee for the next 10 years.

Belgium will put up 60.5% of the funds and France 36.5%, with Luxembourg providing the remaining 3%. Belgian Prime Minister Yves Leterme said these steps were necessary to protect the local retail arm and to reassure Dexia’s shareholders that that their money was fully secured.

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Top Two French Banks Deny $15 Billion Capital Boost

Top Two French Banks Deny $15 Billion Capital Boost

FINANCE

  • BNP Paribas said newspaper claim it will seek to raise $9.4 billion is untrue
  • BNP hopes to reach capital ratio of 9%, 6 years ahead of Basel III schedule
  • Societe Generale denies seeking capital of $5.5 billion

Top French bank BNP Paribas SA said the newspaper claim that it may look to generate $9.4 billion in capital is untrue. The Journal du Dimanche report had also stated that Societe Generale SA might similarly attempt to increase its capital by $5.5 billion as part of a joint move with Germany, which would see the banks in both countries seek to grow capital.

In September, both banks announced plans to avoid depending on US dollar capital and to boost investor confidence. BNP is aiming for a Tier 1 capital ratio of 9%, in accordance with Basel III rules, by 2013. Reaching this rate of financial stability would entail different moves, including reducing its corporate and investment banking segment by $82 billion.

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Moody's Cuts RBS, Lloyds on Government Support Fears

FINANCE

  • Moody's downgrades 12 British lenders, including RBS and Lloyds
  • EU plans recapitalization of $115 billion, Britain unlikely to bailout banks
  • Lloyds refunds customers for misleading PPI information

Moody's Investors Service has reduced credit ratings for twelve British lenders due to fears that the British government may not provide support for the financial sector. Moody's cut five major banks including Royal Bank of Scotland, Lloyds TSB, Santander UK, Co-Operative Bank, Nationwide Building Society and seven smaller British banks.

The two other major lenders, Barclays and HSBC, were unharmed. RBS was cut two levels from Aa3 to A2, while Lloyds was cut by one notch from Aa3 to A1.

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Wall Street Protests Gain Momentum Across US

Wall Street Protests Gain Momentum Across US

FINANCE

  • Protests spread to over a dozen US cities
  • Labor unions join in movement
  • Dallas Fed president voices support; NY Mayor slams protesters

The Occupy Wall Street protests against corporate power and social inequality in the United States have spread to over a dozen cities across the country. The movement began as a loosely organized handful of people who began camping out in Zuccotti Park in New York’s financial district on September 17. Now it has spread through ten states, with new groups adding their voices to the movement.

Protesters are angry about corporate greed, corruption in the government and the growing gap between the rich and poor in America.

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Bank of England Gives British Economy $116 Billion Top-Up

Bank of England Gives British Economy $116 Billion Top-Up

FINANCE

  • UK economy previously received $310 billion in quantitative easing
  • EU Central Bank maintains 1.5% interest rate despite signs of recession
  • Bank of England keeps base lending at 0.5%, inflation to reach 5%

The Bank of England has announced it will plough $116 billion into Britain’s economy to protect the country from the ripple effect of the EU debt crisis and to ease the State’s austerity measures, buying government bonds over a four-month period.

The move leads on from an earlier asset purchases initiative that boosted the British economy $310 billion over the 11-month period ending January 2010. It is hoped that a cash injection from selling government bonds will allow the banks to redirect money to cash-strapped individuals and businesses.

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