Citigroup Profit Slides 46% Amid Coronavirus Fallout -- Update
April 15 2020 - 9:22AM
Dow Jones News
By David Benoit
Citigroup Inc. said Wednesday its first-quarter profit plunged
46%, after the bank set aside nearly $5 billion to prepare for the
wave of loan defaults.
Citigroup's profit for the first three months of the year fell
to $2.52 billion, or $1.05 per share, from $4.71 billion, or $1.87
a share. Analysts had expected $1.07 a share, according to FactSet,
a forecast that has been cut in half since late February.
Revenue rose 12% to $20.73 billion, compared with $18.58 billion
a year earlier and the $19.03 billion analysts expected.
The revenue gains were powered by Citigroup's investment bank,
which benefited from the volatile markets to post a strong quarter
in trading.
Citigroup increased its loan loss provision, money for loans it
now thinks can go bad, by $4.92 billion, from just $278 million in
the prior quarter, partly reflecting an accounting change as well
as concerns about the economy. Of that, $2.85 billion came in the
consumer bank and another $1.88 billion in the corporate bank. Its
total provision in the quarter was $7 billion.
Citigroup shares have fallen 43% this year through Tuesday,
worse than the KBW Nasdaq Bank Index's 37% drop and the S&P
500's roughly 12% retreat. Shares slid 3.3% to $43.90 in premarket
trading.
Citigroup has offices around the world, giving it an early view
into the spread of the virus. The bank moves money around the world
for governments and multinational corporations, but is confronting
a global slowdown that has all but brought the economy to a halt.
At the same time it is grappling with how to keep operations
running as the virus has spread throughout the U.S. and in its
headquarters city, New York.
The first-quarter results are likely only the first sign of a
painful contraction that could get much worse. JPMorgan Chase &
Co. and Wells Fargo & Co. reported sharply lower earnings
Tuesday after socking away billions of additional dollars for
potentially bad loans.
The brunt of the potential loan problems were in the consumer
bank. Its revenue rose 1% to $8.17 billion but the credit costs
sent it to a $754 million loss. The bank said total spending on its
credit cards was flat from the year ago and down 16% from the prior
quarter.
In the institutional group that serves large companies around
the globe, revenue jumped 25% to $12.48 billion and profit rose
7%.
The markets group recorded a 39% gain in revenue, with equities
and fixed income both up by the same. The institutional division
also had a sizable gain on the value of hedges it keeps on
corporate lending.
Citigroup's North America revenue rose 23%, bolstered by the
trading increase. Asia, which faced an earlier outbreak of the
virus, was up 7%, also thanks to the investment bank.
Write to David Benoit at david.benoit@wsj.com
(END) Dow Jones Newswires
April 15, 2020 09:07 ET (13:07 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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