Citi profits fall less than feared

NEW YORK, NY - DECEMBER 05: A 'Citi' sign is displayed outside Citigroup Center near Citibank headquarters in Manhattan on December 5, 2012 in New York City. Citigroup Inc. today announced it was laying off 11,000 workers, about 4 percent of its workforce, in a move to slash costs. (Photo by Mario Tama/Getty Images)©Getty

Citigroup joined rivals in unveiling quarterly profits that were better than investors had feared, the latest sign the consumer divisions of the US banks are helping ease the pressure from a trading slump on Wall Street.

The start of 2016 was tough for the New York-based banking group — net income in the first three months of 2016 dropped 27 per cent from a year ago to $ 3.5bn.

More

On this story

On this topic

IN Banks

However, analysts had pencilled in an even steeper decline. Citi disclosed diluted earnings per share of $ 1.10, better than the forecast $ 1.03.

Shares in Citi rose 2.3 per cent before financial markets opened in New York on Friday.

US bank stocks have already received a boost this week from stronger-than-forecast results from JPMorgan Chase and relatively upbeat results from Bank of America.

Like rivals, Citi’s global consumer operation held up better than its investment bank. Revenues at the retail arm fell 6 per cent to $ 7.8bn while the decline at the Wall Street arm was almost twice as steep, down 11 per cent to $ 8.04bn.

Revenues at the investment bank’s fixed income division were down 11 per cent. They fell 19 per cent in equities. Investment-banking revenue — largely advisory fees from M&A and other deals — fell 27 per cent.

“While our market-sensitive products clearly suffered from weak investor sentiment during the quarter, we continued to make progress in several key areas,” said Michael Corbat, chief executive, in a statement.

He highlighted growth in loans and deposits at the consumer operation, as well as expense reductions. Costs dropped 3 per cent from the same period last year to $ 10.5bn.

Formerly the biggest bank in the US, Citigroup has shrunk to rank fourth largest by assets as Mr Corbat has exited unprofitable or subscale assets. Mostly recently he stuck a deal to sell retail businesses in Argentina, Colombia and Brazil.

Shares in Citi have dropped 13 per cent this year, hurt by low interest rates, the oil price collapse, and concerns about emerging markets, to which it is more exposed than competitors. That has left them trading at a 40 per cent discount to the bank’s book value.

The results come after Citi this week emerged as the only one of eight of the biggest US banks to receive the thumbs up from regulators for its “living will” — how it wound wind down in a crisis.

Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don’t cut articles from FT.com and redistribute by email or post to the web.

Europe homepage

About The Author