Connect with us
Our website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Banking

Citigroup profit triples, exits some overseas consumer units

Citigroup profit triples, exits some overseas consumer units 1

By David Henry

(Reuters) -Citigroup Inc trounced analysts’ first-quarter profit estimates on Thursday as its outlook for an economic recovery driven by vaccinations and government stimulus allowed it to release reserves set aside for loan losses from the pandemic.

Like JPMorgan Chase & Co, which reported earnings on Wednesday, Citi benefited from a boom in capital markets activity, but its consumer bank felt the impact of low interest rates that hurt earnings.

Revenue fell 7% on low interest rates and a 10% decline in loans, largely due to lower consumer credit card loan balances.

Partially offsetting the drag from interest revenue, investment banking revenue surged 46% on stronger equity underwriting fees. Citigroup has been a Wall Street leader in raising money for the so-called blank-check firms or special purpose acquisition companies.

Citi shares were up nearly 3% in early trade.

The lender also said it would exit its consumer businesses in 13 markets across the Asia and EMEA regions, as part of a broader strategic review under new Chief Executive Officer Jane Fraser. As part of the move, Citi will divest those businesses in countries like Australia, China and India.

“While the other 13 markets have excellent businesses, we don’t have the scale we need to compete,” Fraser said in a statement.

Net income tripled to $7.94 billion, or $3.62 per share, from $2.54 billion, or $1.06 per share, a year earlier. Analysts on average had expected a profit of $2.60 per share, according to Refinitiv IBES data.

The bank’s bottom line was bolstered by its decision to draw down $3.85 billion in reserves it had built up for expected loan losses from the pandemic. A year earlier it had added $4.88 billion to its loss reserves.

Citigroup said its Institutional Clients Group will continue to offer services to clients and that it will continue to operate “wealth centers” in Singapore and Hong Kong, as well as London and the United Arab Emirates.

It gave no time frame for the exits.

The move is the latest step in Fraser’s drive to simplify the once far-flung Citigroup consumer business and improve shareholder returns.

Like other large lenders, the bank expects an economic recovery fueled in part by vaccine rollouts across the country and a $1.9 trillion stimulus package pushed through by the Biden administration last month.

Markets and securities revenue rose 2%, compared with an exceptionally strong quarter a year earlier.

Expenses rose 4%, in line with the company’s projections, on increased spending to fix its risk controls and improve its operations.

Data in Citigroup’s report showed that its pre-provision profit, a gauge of bank performance unaffected by changes in estimates and economic assumptions for loss reserves, was down 18% from a year ago.

Earlier on Thursday, Bank of America Corp’s profit more than doubled after it freed up reserves that it had set aside to cover loans that could go bust.

(Reporting by David Henry in New York and Niket Nishant in Bengaluru; additional reporting by Sohini Podder; Writing by Anirban Sen; Editing by Sriraj Kalluvila)

Global Banking and Finance Review Awards Nominations 2022
2022 Awards now open. Click Here to Nominate

Advertisement

Newsletters with Secrets & Analysis. Subscribe Now