Citigroup’s net income, impacted by COVID-19, had declined by 46% in the first quarter of 2020 compared to the same period in the last year
Citibank branch on Michigan Avenue in Chicago. (Credit: Wkipedia.org/TonyTheTiger.)
Citigroup has reported a net income of $2.5bn, or $1.05 per diluted share, for the first quarter of 2020, a 46% decrease compared to $4.7bn, or $1.87 per diluted share, for the same period of last year.
The bank attributed the decline in net income to the higher loan loss reserves, reflecting the impact of changes in Citi’s economic outlook on estimated lifetime losses under the new Current Expected Credit Loss standard (CECL).
The US-based lender has reported revenues of $20.7bn for the first quarter of 2020, a 12% increase compared to $1.8bn for the corresponding period of the previous year.
Citigroup’s first-quarter operating expenses were $10.6bn and were nearly equal to last year’s operating expenses of $10.58bn.
The expenses included compensation and benefits amounting $5.65bn, premises and equipment expenses amounting to $565m, followed by technology/communication expenses amounting to $1.7bn, followed by advertising and marketing expenses of $328m and other operating expenses of $2.3bn.
Citigroup’s cost of credit was $7bn for the first quarter of 2020, compared to $2bn in the prior-year period.
Region-wise break-up of revenues shows that in North America, Citigroup earned $10.17bn, followed by Asia and the EMEA region with $4.4bn and $3.47bn, respectively. In Latin America, the bank earned $2.66bn. Revenues from corporate and other operations included $73m.
Citigroup’s loans increased to $721bn in Q1, 2020
The bank’s loans for the period were $721bn, which increased 6% compared to $682bn for the same period last year. Its deposits for the period were $1.2 trillion, increasing 15% year-on-year from $1.03 trillion.
Citi CEO Michael Corbat said: “Our earnings for the first quarter were significantly impacted by the COVID-19 pandemic. We managed our expenses with discipline and had good revenue performance as the economic shocks caused by the pandemic weren’t felt until late in the quarter.
“However, the deteriorating economic outlook and the transition to the new Current Expected Credit Loss standard (CECL) caused us to build significant loan loss reserves.
“COVID-19 is a public health crisis with severe economic ramifications. All of the work we have done in recent years has put us in a very strong position from a capital, liquidity and balance sheet perspective.
“While no one knows the severity or longevity of the virus’ impact on the global economy, we have the resources we need to serve our clients without jeopardizing our safety and soundness.”