Citigroup Profit Falls 73% as it Girds for Coronavirus Economy -- Update
July 14 2020 - 9:27AM
Dow Jones News
By David Benoit
Citigroup Inc.'s second-quarter profit fell 73%, weighed down by
$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 to the pandemic 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.
Citigroup had already put aside $7.03 billion in the first
quarter for potentially souring loans and now has a total $28.28
billion allowance for loan losses as of the end of June.
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 1.5%
to $53 premarket.
Revenue in the bank's consumer operations was down 10% to $7.34
billion. Spending volume on the bank's credit cards fell 24%.
Offsetting some of the pain was a strong quarter in the
corporate and investment bank, where revenue rose 21% to $12.14
billion.
The corporate and investment bank was powered by a surging
trading business, where revenue rose 55%. Its fixed-income trading
operation posted $5.6 billion in revenue, up 68%.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
July 14, 2020 09:12 ET (13:12 GMT)
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