Dive Brief:
- Profit at Citi dropped 46% in 2022’s first quarter, compared with the same three-month period a year earlier — to $4.31 billion from $7.94 billion, the bank reported Thursday.
- The bank set aside $1.9 billion for potential loan losses due to its Russia exposure. About $1 billion of that is directly tied to Russia, and the rest is meant to cover volatility in international finance as a result of the ongoing war in Ukraine, Citi CFO Mark Mason said, according to The Wall Street Journal.
- Citi did, however, cut its total Russia exposure by $2 billion over the quarter — to $7.8 billion from the $9.8 billion it warned of holding as the war began. The bank on Thursday warned it expects to lose $2.5 billion to $3 billion at most, down from more than $4 billion several weeks ago.
Dive Insight:
Thursday marked the first quarterly report that broke down Citi’s earnings by its new structure — one that combines its U.S. consumer and global wealth management division under one umbrella, breaks its institutional operations into separate trading, investment and corporate banking, and services units, and creates a "legacy franchises" segment to house assets the bank intends to sell off.
Within some of those silos, there were bright spots amid big dips. Institutional clients group revenue, including trading and investment banking, slumped 2%. But the division’s profit fell by more than half over the Russia charges and a spike in expenses.
Revenue in personal banking and global wealth management dipped 1%, but its profit dropped 23%.
Citi reported a 43% slump in investment banking fees, but the fees it gleaned from advisory work rose over the quarter.
Not all of Citi’s double-digit percentage-point fluctuations Thursday were negative. Credit-card spending by consumers saw a 23% boost, and credit-card loans jumped 7%.
Unlike rival JPMorgan Chase, which took a $120 million loss from "extreme price movements" in nickel, Citi saw a massive 173% jump in commodities trading revenue.
"When you think about the inflationary pressures, the supply-chain disruptions, the political tensions, those things led to increased volatility and really a conducive environment for market-making, and we took advantage of that," Mason said Thursday, according to Bloomberg.
Citi saw a 15% jump in total expenses over the quarter as it continues to divest itself from retail banking in several overseas markets. The bank last year announced plans to exit 13 markets — and later added Mexico to that list. It so far has sold or unwound its presence in 10.
The bank also continues to plow funds into a revamp of its infrastructure to satisfy two 2020 consent orders from the Federal Reserve and the Office of the Comptroller of the Currency.
"While we are making necessary investments in our infrastructure, risk and controls and our businesses, we remain committed to improving our returns," Citi CEO Jane Fraser said Thursday in a statement.
As for the Russia exposure, Mason said Citi been able to shift some of that total into safer assets, including deposits at the Russian central bank, according to The Wall Street Journal.
