NEW YORK: Citigroup Inc., the largest U.S. financial institution, said Friday that its profit fell 26 percent in the fourth quarter from results a year earlier that were boosted by a gain on the sale of a business line. Its latest earnings still beat Wall Street expectations.

The New York-based bank said it earned $5.13 billion (\3.96 billion), or $1.03 (\.79) a share, in the October-December period, down from $6.93 billion (\5.35 billion), or $1.37 (\1.06) a share, a year earlier. The year-earlier figure included a $2 billion (\1.54 billion) gain on the sale of an asset management business; excluding the gain, earnings in the fourth quarter of 2005 were 98 cents a share.

The latest quarter’s results included $415 million (\320.27 million) in charges stemming from previously announced cutbacks in the bank’s consumer-finance operations in Japan.

Quarterly revenue was a record $23.83 billion (\18.39 billion), up from $20.78 billion (\16.04 billion) in the same period in 2005.

Analysts surveyed by Thomson Financial had projected earnings of $1.00 (\.77) a share on revenue of $22.45 billion (\17.33 billion).

The bank also announced that the board approved a 10 percent increase to the quarterly dividend on the company’s common stock to 54 cents per share from 49 cents per share, payable on Feb. 23 to stockholders of record Feb. 5.

Despite the strong showing, Citigroup shares fell 37 cents to $54.02 on morning trading on the New York Stock Exchange as investors took profits from the recent run-up in share prices.

Charles Prince, chairman and chief executive, told a phone conference with analysts that it was “a good, solid quarter” but that there was a need for improvement in corporate investment banking because “many of our competitors reported even higher revenue growth.”

In a statement accompanying the results, Prince noted “positive trends” in U.S. consumer operations, offset in part by the problems in the Japanese finance arena, where new legislation limiting lending rates and terms prompted Citigroup to cut back operations. Citigroup opened nearly 1,200 bank branches and consumer finance offices worldwide last year, the report said.

For 2007, Prince said, the bank’s priorities include growing businesses while ‘focusing sharply on expense management and remaining highly disciplined in credit management.”

Analysts and investors have criticized the bank for expenses that have been rising faster than revenue.

Prince in December appointed Robert Druskin, who chairs Citigroup’s corporate and investment banking division, to review the bank’s expense base. Prince said he expects the review to be completed by the end of the January-March quarter.

The latest earnings report indicated that operating expenses were up 23 percent in the fourth quarter.

Like other banks reporting this week, Citigroup faced some deterioration in credit quality. It raised provisions for losses to $2.3 billion (\1.77 billion) in the fourth quarter from $2.1 billion (\1.62 billion) in the third period.

Prince told the conference with analysts that the bank expected some weakening in credit quality this year, in 2007, saying “We are planning on headwinds from credit in 2007, and we are managing our business in light of that.”

For the full year, profits totaled $21.54 billion (\16.62 billion), or $4.31 (\3.33) a share, down 12 percent from $24.6 billion (\18.98 billion), or $4.75 (\3.67) a share in 2005. Revenue was $89.6 billion (\69.15 billion) for 2006, up from $83.6 billion (\64.52 billion) in 2005.

Citigroup ended the year with $1.88 trillion (\1.45 trillion) in assets.

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On the Net:

http://www.citigroup.com

DETROIT: After years of ceding much of the U.S. car market to Asian competitors, the Big Three automakers in Detroit are preparing to roll out an array of new models that they hope will bring buyers back to their showrooms to look for something other than trucks.

General Motors and Ford Motor plan to introduce new versions of aging or unpopular models at the North American International Auto Show, which begins next week in Detroit. The Chrysler unit of DaimlerChrysler will show off a concept car likely to be the replacement for the once hot-selling Chrysler 300.

The new models, most of which will not have their debut until next autumn, are critical to the survival of their makers, which have lost billions of dollars last year as consumers shifted away from trucks and sport utility vehicles to more fuel efficient cars made by the competition.

Perhaps the most important model is the 2008 Chevrolet Malibu, which GM officials and many industry analysts predict will be good enough to take on the gorillas of the midsize segment Toyota Camry and Honda Accord.

“The Malibu is one of the most important car launches really in the history of GM,” Mike Jackson, GM’s vice president for North American marketing and advertising, said during a recent interview. “We think it compares very favorably to Camry and Accord in a very competitive segment.”

Analysts say a manufacturer cannot survive without a strong midsize entry, where Chevrolet, GM’s largest brand, has cranked out disappointing vehicles for years.

But the new Malibu, to be built in Fairfax, Kansas, is radically different from the current model, generally regarded as boxy and boring. It has sloping, elegant lines. Its front grille is tough-looking and the tires are pushed to the edge of the fenders, giving it a wider stance.

It is designed to take a part of the market from Camry, the perennial top-selling car in America. Through November, Toyota sold 408,906 Camrys, a 2.6 percent increase over strong sales numbers for the first 11 months of 2005.

Although the U.S. automakers had trucks and vans on the list, the only car from the Big Three among the 20 top sellers last year was the Chevrolet Impala at 263,708. The old Malibu amounted to only 37 percent of Camry’s sales at 152,465.

Rebecca Lindland, an auto analyst at Global Insight, an economic research and consulting company, has seen Malibu prototypes. She said its exterior has a longer dash-to-axle ratio than the old one, making it appear more aggressive, and its interior is more modern and made of better quality materials.

Some versions have two-tone brown-and-brick colored dash boards, seats and consoles.

The Malibu shows signs of GM returning to its roots, producing distinctly American cars that touch buyers’ emotions rather giving them low- cost copies of Toyotas or Hondas, Lindland said.

“GM understands that, trying to go back to appealing to the consumer that really wants the American vehicle,” she said. “And there’s plenty of them.”

The Malibu will come with 2.4-liter four-cylinder or 3.6-liter V-6 engines. GM says both will be competitive with Camry on fuel economy. A four-cylinder Camry gets an estimated 34 miles a gallon, or 6.9 liters per 100 kilometers, on the highway.

GM also says the Malibu will compete with Camry on price, but it would not reveal how much the Malibu will cost just yet. The lowest-price Camry lists for $18,720.

Jackson said that with the Malibu and the 2008 Cadillac CTS, which also will have its debut at the Detroit auto show, GM knows it must be best-in- class in looks, fit, finish, quality and performance.

Japanese brands have led in many of those areas for years, with GM contending that the perception still exists even though it has closed gaps or passed Toyota and Honda.

“We do understand that in order to make this new Malibu really a success, we’ve got to go and really close the gap between perception and reality,” Jackson said. “Addressing the perception and reality gap is part of the marketing challenge.”

The Malibu marketing campaign will play on consumers’ emotions, Jackson said, centering on songs written about Chevrolets.

“People don’t write songs about Toyota,” he said.

The only problem for GM is that Toyota and Honda are not standing still. Honda is readying a new, futuristic looking Accord, while the redesigned Camry looks far sleeker than its dull predecessors.

“Toyota is starting to find this out, too, bringing some emotion to their cars,” Lindland said.

Oil Prices, Jobs Data Lift Dow to Record Dow Industrials Close at Record 12,515 After Oil Prices Plunge and Jobless Claims Drop By TIM PARADIS The Associated Press

NEW YORK - Investors regained some of their swagger Thursday, sending stocks higher and the Dow Jones industrials to another record close after oil prices plunged and a drop in jobless claims indicated the economy wasn’t slowing too quickly.

The Dow industrials rose 72.82, or 0.59 percent, to 12,514.98, topping the previous record close, which came Dec. 27, by 4.41 points. It marked the Dow’s 23rd record close since the beginning of October. Broader stock indicators also rose. The Standard & Poor’s 500 index came within range of its six-year closing high, rising 8.97, or 0.63 percent, to 1,423.82. The Nasdaq composite index advanced 25.52, or 1.04 percent, to 2,484.85.

Thursday’s trading stood in sharp contrast to recent sessions in which investors made small bets as they wrestled with whether stocks would eventually push higher with the same vigor as in 2006. Economic data, such as Thursday’s unemployment figures, and oil prices, which have fallen for four straight days, have drawn the market’s attention as investors try to piece together where Wall Street is headed.

Strength in employment indicates the economy is holding up well as it slows. A number of strong profit forecasts lent support to that notion Thursday. However, investors want the economy to give off some signs of gradual slowdown in order to wring a cut in interest rates from the Federal Reserve.

“The markets had a very strong run in the fourth quarter and we have spent the first week and a half consolidating those gains,” said Steven Goldman, chief market strategist at Weeden & Co. He contends stocks remain “in a pretty good period,” as with 2006.

Bonds fell sharply as the drop in jobless claims pointed to a healthy economy and stirred some concerns that the Fed might not lower rates. Adding to concern, an auction of Treasury Inflation-Protected Securities, or TIPS, drew a lackluster response. The yield on the benchmark 10-year Treasury note rose to 4.74 percent from 4.69 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude, which has already declined 15 percent in 2007, fell to its lowest level since May 2005, settling down $2.14 to $51.88 a barrel on the New York Mercantile Exchange. A pullback by investment funds and an unusually warm winter has unnerved some investors, and in recent days suggested that a period of enormous profits at energy companies might be nearing an end.

“I think low oil prices are good for everybody that doesn’t make oil and the market is starting to realize that not everyone makes oil,” said Scott Merritt, a U.S. equity strategist at JPMorgan Asset Management.

In economic news, the Labor Department said the number of newly laid off workers seeking unemployment benefits fell to a six-month low last week, dropping by 26,000 to 299,000 on a seasonally adjusted basis. It was the first time jobless claims have moved below 300,000 since the week of July 22.

“You’re seeing the Nasdaq establish some leadership characteristics, which tends to instill confidence,” Goldman said. “If there were some concerns as far as the economy going into a steep slowdown, those stocks probably would languish and be a concern to investors,” he said of stocks traded on the tech-laden Nasdaq.

Comments from a handful of companies on profits added to the upbeat mood on Wall Street and suggested earnings remained strong in the final quarter of 2006. As many on Wall Street expect profits will prove more modest in 2007 amid a slowing economy, some investors have been holding their breath to see how companies’ bottom lines would hold up in the fourth quarter.

Drug maker Genentech Inc. rose $3.66, or 4.4 percent, to $87.40 after reporting that robust demand for its cancer drugs helped push fourth-quarter profits up 75 percent.

Quest Software Inc., which makes application and database-management software, rose 31 cents, or 2.1 percent, to $15.30 after an analyst said the company likely had a strong fourth quarter.

C-Cor Inc., which makes network distribution equipment for cable TV operators, rose 77 cents, or 6.5 percent, to $12.56 after predicting it will beat its fiscal second-quarter forecast.

Wabtec Corp. rose $1.50, or 5.1 percent, to $30.70 after the maker of locomotive and railcar parts issued its 2007 forecasts and said its earnings and revenue expectations should meet its expectations.

Investors weren’t pleased with all of the earnings news. Amdocs Ltd., a maker of customer-service software, fell $3.63, or 9.2 percent, to $35.70 after lowering its revenue forecast for 2007. The company cited lower-than-expected activity among its customers in the telecommunications industry.

Airlines stocks, which have been buoyed as oil prices have receded and brightened the profit picture for carriers, continued their advance Thursday. In particular, AirTran Holdings Inc. rose 48 cents, or 4 percent, to $12.40 after it sweetened its cash-and-stock offer for rival Midwest Air Group Inc., increasing its bid by about 18 percent. AirTran tried to appeal to Midwest shareholders. Midwest, which has rebuffed AirTran’s advances, rose 50 cents, or 3.9 percent, to $13.40.

The Russell 2000 index of smaller companies rose 9.58, or 1.23 percent, to 788.45.

Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where consolidated volume came to 2.92 billion shares, compared with 2.82 billion traded Wednesday.

Overseas, Japan’s Nikkei stock average closed down 0.62 percent. Britain’s FTSE 100 closed up 1.13 percent after being down following a surprise hike in interest rates by the Bank of England. Germany’s DAX index closed up 1.84 percent, and France’s CAC-40 was up 1.96 percent.

On the Net:

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com