Citigroup cost cuts cushion profit slide

Citigroup has posted another drop in year-on-year revenues and profits, highlighting its post-crisis efforts to slim down at a time of pressure on the banking industry from persistently low interest rates, volatile markets and tightened regulation.

The decline was less than analysts expected, however, further easing concerns about the impact of the UK’s vote for Brexit on the industry after rival JPMorgan similarly exceeded lowered expectations a day earlier.

Citi generated total revenues of $ 17.5bn between April and June, about the same as the difficult first quarter and 8 per cent lower than the same period a year ago.

Revenues fell 6 per cent year-over-year at the bank’s retail banking arm, hurt by the strong dollar. The consumer division makes about two-fifths of revenues outside North America, with a hefty presence in Asia and Latin America.

Yet its results were supported by a 9 per cent decline in net credit losses as fewer borrowers defaulted.

The investment bank also held up better than feared, posting an overall 2 per cent improvement in revenues — helped by a 10 per cent rise at the markets and securities business.

Across the bank net income came in at $ 4bn, up 14 per cent from the first quarter but down by the same proportion, 14 per cent, year-on-year.

Michael Corbat, chief executive, has led efforts to make Citi smaller and simpler, disposing of assets around the globe and cutting costs as the bank seeks to recover from the financial crisis. The former financial supermarket earlier this year slipped behind Wells Fargo in size, becoming the country’s fourth largest bank by assets.

Yet returns also remain underwhelming. Citi generated a return on equity of 7 per cent, down from 9.1 per cent a year earlier.

Mr Corbat said in a statement: “These results demonstrate our ability to generate solid earnings in a challenging and volatile environment, again highlighting the resilience of our institution. “

Citi produced diluted earnings per share of $ 1.24, better than the $ 1.10 pencilled in by analysts. The results pushed shares up almost 3 per cent in pre-market trading. Before the rally they had fallen 14 per cent this year, more than the benchmark US banking index.

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