Citigroup profit falls 73% as it girds for coronavirus economy
Results weighed down by $7.9 billion the New York bank set aside for potentially rising loan losses
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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.
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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.
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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.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| C | CITIGROUP INC. | 68.76 | +0.61 | +0.90% |
| JPM | JPMORGAN CHASE & CO. | 245.33 | +3.40 | +1.41% |
| WFC | WELLS FARGO & CO. | 74.34 | +1.54 | +2.12% |
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.
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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.