Business News

Citigroup Profit Falls on Higher Loan-Loss Reserves, Weak Dealmaking Activity

Distressed Patriotic Flag Unisex T-Shirt - Celebrate Comfort and Country $11.29 USD Get it here>>


Citigroup Inc. reported a 25 percent drop in third-quarter profit on Friday as the most global of U.S. banks set aside funds to cover soured loans from a potential economic downturn, while its investment bank struggled with a slump in global dealmaking.

The U.S. Federal Reserve’s aggressive actions to stamp out decades-high inflation have triggered fears of a downturn in the economy that could trigger a surge in loan losses for the banks.

Citi added $370 million to its loan-loss reserves in the latest quarter, compared with a reserve release of $1.16 billion a year earlier.

The increase in reserves pushed up Citi’s overall credit costs to $1.36 billion, the highest in eight quarters since the third quarter of 2020.

That compares with a benefit of $192 million a year earlier when extraordinary government stimulus helped the economy to rebound from pandemic lows.

Investment banking revenue tumbled 64 percent to $631 million from a year earlier when Citi had its best M&A quarter and the second-best investment banking quarter in a decade.

Shares of Citi, which were down 1.2 percent, have been trading at about half of the company’s net worth as it struggles to keep pace with larger rivals in terms of stock valuations and profitability.

Citi will likely take “3–5 years to hit more ‘normalized’ profitability measures,” said Eric Compton, equity strategist at Morningstar.

Revenue for Citi’s Treasury and Trade solutions business, which processes nearly $3 trillion a day in 140 currencies and 160 countries, rose 40 percent to $3.2 billion as fees and trade loans grew.

Net profit was $3.5 billion, or $1.63 per share, in the three months ended Sept. 30, compared with $4.6 billion, or $2.15 per share, a year earlier.

Analysts on average had expected a profit of $1.42 per share, according to Refinitiv IBES data. It was not immediately clear if the reported numbers were comparable to estimates.

By Mehnaz Yasmin

Reuters

Follow



Source link

TruthUSA

I'm TruthUSA, the author behind TruthUSA News Hub located at https://truthusa.us/. With our One Story at a Time," my aim is to provide you with unbiased and comprehensive news coverage. I dive deep into the latest happenings in the US and global events, and bring you objective stories sourced from reputable sources. My goal is to keep you informed and enlightened, ensuring you have access to the truth. Stay tuned to TruthUSA News Hub to discover the reality behind the headlines and gain a well-rounded perspective on the world.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.