Citigroup earnings drop eight per cent - but beat analyst expectations
Jul 15 2016
Earnings season for the banking industry has commenced as big United States banks led the season, revealing their second quarter of fiscal year 2016 (2QFY16) financial results.
In a statement posted today, the investment banking giant said revenues fell eight per cent to $17.5bn (£1.31bn) in the second quarter, down from $19.2bn during the same period past year. Street estimated the company to deliver earnings of $1.10 a share. Citigroup had agreed to an additional $7 billion in asset reductions at the end of the second quarter.
Revenue excluding accounting adjustments fell 8 percent to $17.5 billion, while expenses declined 5 percent to $10.4 billion.
Citi Holdings, the portfolio of unwanted assets tagged for sale, was profitable for the eighth consecutive quarter, booking a $93 million profit.
Citigroup Inc. (NYSE: C) reported second-quarter fiscal 2016 results before markets opened Friday morning.
Chief executive officer Michael Corbat said: "These results demonstrate our ability to generate solid earnings in a challenging and volatile environment, again highlighting the resilience of our institution".
The decline in net income was driven by lower revenues and a higher effective tax rate, partially offset by lower cost of credit and lower operating expenses.
The bank's allowance for loan losses totaled $12.3 billion for the quarter, down from $14.1 billion in the prior year quarter. And overall profit was better than predictions made by Mr. Corbat last month, when he said that second-quarter profit would be flat versus the first quarter.
Profit at the consumer bank fell 18%, with the biggest drop in income from continuing operations of 22% from a year earlier coming in North America.
Citigroup's shares rose 1 percent in premarket trading Friday. The unit where it stores businesses and loans that it wants to sell, Citi Holdings, continued to get smaller, with assets shrinking to $66 billion from $125 billion a year ago as the bank sold assets including its Japanese consumer bank and its US subprime lender.
Citigroup said it repurchased 30m common shares and returned $1.5bn of capital to shareholders.