CITIGROUP Inc reported a nearly 73% plunge in quarterly profit on Tuesday as the bank set aside US$5.6 bil (RM23.88 bil) to brace itself for a potential surge in loan defaults stemming from the coronavirus outbreak.
The New York-based bank reported a profit of US$1.32 bil, or 50 cents per share, for the second quarter ended June 30, down from US$4.8 bil, or US$1.95 per share, a year earlier.
Revenue rose 5% to US$19.77 bil.
Analysts on average had forecast US$19.12 bil in revenue and earnings of 28 cents per share, according to data. It was not immediately clear whether estimates were comparable with the figures reported by the bank.
The largest US lenders have so far stashed away more than US$52 bil to prepare for potential losses this year after government-ordered shutdowns triggered historic unemployment and a slowdown in spending.
As the third-largest credit card issuer in the United States, Citi is especially susceptible to any jump in credit card delinquencies, which tend to track rises in unemployment closely.
So far, Citi has offered forbearance on 2 million credit card accounts representing 6% of balances, the bank said.
While the pandemic has caused banks to reevaluate their loan books, it has been a boon for deposits.
End of period deposits surged 18% to US$1.23 tril as stimulus programmes left consumers and corporate clients with more cash to help them ride out the economic consequences of the pandemic.
Total loans, however, fell marginally to US$685 bil.
Trading fees were again a bright spot for the bank as market volatility prompted more client activity, helping offset rock-bottom interest rates that make it harder for banks to earn money on lending.
Fixed income jumped 68% from a year earlier, overshadowing a 3% decline in equities trading. – July 14, 2020, Reuters
