Citigroup Profit Falls 73% as it Girds for Coronavirus Economy
July 14 2020 - 8:54AM
Dow Jones News
By David Benoit
Citigroup Inc.'s second-quarter profit fell 73%, weighed down by
the $7.9 billion the bank set aside for potentially rising loan
losses.
The spread of the novel coronavirus around the globe and the
resulting economic slowdown have pummeled the banking industry and
raised concerns about loan defaults by consumers and big businesses
alike.
The bank posted a profit of $1.32 billion, down from $4.8
billion a year earlier. At 50 cents per share, the results exceeded
the average analyst estimate of 35 cents a share, according to
FactSet. Per-share earnings were $1.95 a year ago.
Revenue rose 5% to $19.77 billion.
Citigroup's loan-loss provision included $2.21 billion in net
charge-offs and $5.7 billion it added to its reserves for loans
that might default in the future. Analysts had expected the total
would be $7.36 billion.
Lenders have responded by allowing customers to temporarily skip
payments. But banks are bulking up for a potential wave of defaults
and delinquencies later this year, especially if the virus
continues to spread.
Revenue in the bank's consumer operations was down 10% to $7.34
billion. Offsetting some of the pain was a strong quarter in the
corporate and investment bank, where revenue rose 21% to $12.14
billion.
Citigroup shares are down 35% this year, in line with the KBW
Nasdaq Bank Index but worse than the broader market. Bank stocks
have underperformed as investors have braced for loan-loss
provisions and lower margins to eat away profits. Shares rose 1.7%
to $53.05 premarket.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
July 14, 2020 08:39 ET (12:39 GMT)
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