Citigroup isn't as enthusiastic as its peers abouta comeback in the housing market.
On Friday, executives at Wells Fargo and JPMorgan Chasedeclared that the long-struggling market had turned a corner. On Monday,Citigroup's top number-cruncher said he wasn't so sure.
In a conference call with reporters after the bank releasedits quarterly earnings, chief financial officer John Gerspach cautioned thatrecent history is littered with upturns in the housing market that provedshort-lived.
He said that despite a few signs of stabilization in thehousing market, there are "still some rather significant challenges to befaced." He warned against predictions with the uncertain presidentialelection and federal budget still casting a shadow.
"I don't use phrases like 'turn the corner,'"Gerspach said, referring to statements Friday from JPMorgan CEO Jamie Dimon andWells Fargo finance chief Tim Sloan. "I have difficulty seeing cornerssometimes, so I'm not sure what corner we may have turned."
"There's still a question in my mind about whetherwe've got a strong enough economy to continue sustaining the housingmarket," he added.
Citigroup reported earnings that beat analysts'expectations, after stripping out one-time items like a big write-down it hadto take because it got less money than it had hoped when it negotiated to sellits stake in its retail brokerage.
Investors were pleased with the results and sent the stockup more than 4 percent, rising $1.55 to $36.30 in afternoon trading.
Citigroup said that revenue was helped by mortgagerefinancing, the same as at Wells Fargo and JPMorgan. Some of that business,however, is fueled by government programs to encourage refinancing. And thebanks don't expect the refinancing boom to continue once interest rates startto rise, which could be as early as next year.
Mortgage originations jumped 56 percent at Wells Fargo and29 percent at JPMorgan compared with a year ago. At Citi, they fell 15 percent.
Mortgages, and the securities they were bundled into, were ascourge during the financial crisis, felling storied financial institutionsthat made loans that were too risky or bet that securities made of subprimemortgages would keep rising.
The banks' mortgage units are still a magnet for lawsuitsand regulatory charges. In August, Citigroup agreed to settle lawsuits fromshareholders who said the bank didn't properly warn them of its exposure torisky subprime debt.
Citigroup also reported Monday that it had to set aside moremoney in case it has to buy back more mortgages from investors who bought themin the run-up to the financial crisis, and now feel ripped off. Gerspach saidthe bank was seeing "increased activity" in so-called repurchasedemands from Freddie Mac, the government-sponsored mortgage giant.
Overall, the bank trimmed about 2 percent of its jobs,dropping to 262,000 employees from 267,000. It spent less on advertising andmarketing, but more on technology and communication.
Citigroup is still trying to patch its reputation after thefinancial crisis nearly brought it to collapse. After years of empire-building,the bank has been selling units and trying to become more efficient and moremanageable.
CEO Vikram Pandit is still an ardent defender of thebig-bank model, even though the former CEO, Sandy Weill, went on CNBC in Julyand said big banks should be broken up. It was a surprising change of heart forthe dealmaker who built Citi into a behemoth.
Citi also has to figure out how to pay top executiveswithout alienating its shareholders. Citi paid Pandit nearly $15 million for2011, about half in option awards, but shareholders in the spring said theydisagreed with the payout.
Gerspach declined to comment on how the bank might changeexecutive pay next year, saying that was the board's purview.
Excluding one-time items, net income was $3.3 billion. Thatamounted to $1.06 per share, beating the 96 cents predicted by analysts polledby financial data provider FactSet. Analyst predictions generally excludeone-time charges and gains.
Revenue, excluding the special charges, was $19.4 billion.That beat expectations of $18 billion.
The bank wrote down $4.7 billion after agreeing to sell itsportion of retail brokerage Morgan Stanley Smith Barney for less than it hadhoped. Including that and other one-time charges, net income was $455 million,and revenue was $14 billion.
Without the special charges, net income and revenue wereboth up. With them, net income and revenue were down significantly.