(FILES) This file photo taken on July 14, 2014 shows the Citibank Corporate Office & Headquarters in New York. Citigroup reported a hefty decline in first quarter earnings April 15, 2016 due to weak trading revenues and the energy bust in results that still bested analyst expectations.Net income for the first quarter dropped 26.6 percent to $3.5billion. Revenues were down 11.4 percent to $17.6 billion. / AFP PHOTO / TIMOTHY A. CLARY
NEW YORK: Citigroup Inc’s quarterly profit plunged 27% as it earned less from trading and investment banking and incurred higher costs related to shrinking some of its businesses.
The profit decline is the biggest among big US banks that have reported first-quarter results so far, but lower operating expenses helped Citigroup beat Wall Street’s low expectations.
Shares of the No.4 US bank by assets were up more than 2% at US$46.15 in premarket trading on Friday.
Banks globally have had a tough start to the year amid near-zero interest rates and a slowdown in China. Adding to the pain for banks are loans to energy companies as a slump in oil prices drives many oil and gas producers to the brink of bankruptcy.
Investment banking fees across the industry fell 29% in the period, the slowest first-quarter since 2009, according to Reuters data.
“While our market-sensitive products clearly suffered from weak investor sentiment during the quarter, we continued to make progress in several key areas,” chief executive Michael Corbat said in a statement.
Revenue from fixed income markets fell 11.5% to US$3.09bil (RM12.05bil) in the first quarter, while investment banking revenue slumped 27.2% to US$875mil (RM3.4bil). However, operating expenses declined 3.3% to US$10.5bil (RM40.9bil).
Citigroup, like its rivals, has resorted to aggressive cost controls to underpin earnings over the past several quarters as revenue remains weak.
The bank, which has more assets in emerging markets than other US banks, has been exiting less-profitable markets and cutting jobs to become more efficient. The company recorded US$491mil (RM1.9bil) in so-called “repositioning” charges.
Citigroup’s better-than-expected results come two days after it won a huge endorsement from regulators, who said the bank was the only one of eight reviewed to have a credible plan to deal with a potential bankruptcy without relying on public money.
The endorsement gives investors reason to believe that Citigroup will win approval in June from the US Federal Reserve to return more money to shareholders.
Citigroup’s net income fell to US$3.5bil, or US$1.10 per share, in the quarter ended March 31, beating the average analyst estimate of US$1.03 per share, according to Thomson Reuters I/B/E/S.
Revenue fell 11% to US$17.56bil, but topped the average estimate of US$17.48bil. - Reuters
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
