Citigroup’s first-quarter profit tumbles 46% as bank sets aside more money for loan losses

Earnings

Michael Corbat, CEO of Citigroup at the 2018 WEF in Davos, Switzerland.

Adam Galica | CNBC

Citigroup reported first-quarter earnings on Wednesday. Here’s how the company did:

  • Earnings: $1.05 per share vs $1.87 per share in the year-earlier period
  • Revenue: $20.7 billion, up 12% from the previous year
  • Net income: $2.52 billion, down 46% from the prior year
  • Loan loss reserves: up $4.9 billion

The company noted revenue was up 12% because of higher fixed income and equity markets trading revenue. Revenue from the bank’s fixed income trading division surged 39% year over year to $4.8 billion. That’s well above a StreetAccount estimate of $3.99 billion. Equity trading revenue also jumped 39% to $1.2 billion, surpassing an estimate of $1.04 billion. 

Citigroup shares fell nearly 3% in the premarket. 

Wall Street had anticipated earnings per share of $1.04 on revenue of $19 billion based on Refinitiv consensus estimates. However, it’s difficult to compare reported earnings to analyst estimates for Citigroup, as the coronavirus pandemic continues to hit global economies and makes earnings impact difficult to assess.

“Our earnings for the first quarter were significantly impacted by the COVID-19 pandemic,” CEO Michael Corbat said in a statement. “The deteriorating economic outlook and the transition to the new Current Expected Credit Loss standard (CECL) caused us to build significant loan loss reserves.”

Citigroup shares have tumbled more than 43% as investors grapple with the economic ramifications of the coronavirus outbreak. Nearly 2 million cases have been confirmed around the world, according to Johns Hopkins University.

The outbreak led to a virtual shutdown of the global economy as governments urge people to stay at home. It also led to unprecedented stimulus from the Federal Reserve and U.S. lawmakers to stem the economic fallout.

Citigroup said last month it would give $1,000 to eligible workers making $60,000 or less to help ease the “financial burden” from the outbreak.

Citigroup’s earnings come a day after JPMorgan Chase and Wells Fargo released their quarterly results. Bank of America and Goldman Sachs reported earlier on Wednesday.

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