Morning Commentary: RBS preferreds weaken despite swing to profit; Citi lowers profit, shares rise

By Stephanie N. Rotondo

Phoenix, Oct. 31 – It was slow going in the preferred stock market Friday, even in Royal Bank of Scotland Group plc paper as the company reported a third-quarter profit.

And, that swing to a profit didn’t do much to help the Edinburgh, Scotland-based bank’s preferreds, which were mostly weaker in early trading.

The 5.9% noncumulative guaranteed trust preferred securities (NYSE: RBSPE) were off 6 cents at $23.78.

For the quarter, the bank reported a profit of £896 million, which compared to a net loss of £828 million the year before. However, the results were weighed down as the company set aside £780 million to cover any fines and settlements that may result from a currency market investigation.

Citigroup Inc.’s preferreds were meantime slightly more active – and mostly better – following the bank’s own amended earnings release late Thursday.

The 5.8% series C noncumulative preferreds (NYSE: CPC) were up a nickel in early trading at $24.21. The 7.875% fixed-to-floating rate trust preferred securities (NYSE: CPN) were steady at $26.60.

Citigroup put out numbers on Oct. 14, but amended those figures on Thursday to reflect a $600 million increase in legal costs.

The company initially posted net income of $3.4 billion, but changed that to $2.8 billion. That pushed the earnings per share down to 88 cents from $1.07.

Analysts had predicted earnings per share of $1.05.

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