Dive Brief:
- Citi’s profit jumped to $6.2 billion during the second quarter after the bank released about $2.4 billion in loan-loss reserves, the bank reported Wednesday. That’s more than five times the $1.1 billion profit the bank reported in last year’s second quarter.
- Revenue at the bank has fallen 12% year over year, however — from $19.8 billion in 2020’s second quarter to $17.5 billion as of June 30. Much of that drop came in the past quarter. Revenue stood at $19.3 billion as of March 31.
- Citi’s standout unit this quarter may have been equity markets, where stock-trading revenue jumped 37% year over year. That performance outpaced increases of 33% and 13%, respectively, by JPMorgan Chase and Bank of America and a 12% drop by Goldman Sachs, according to Bloomberg.
Dive Insight:
Despite the profit bump, Citi saw revenue decreases of 7% in consumer banking and 14% among its institutional clients group. However, the loan-loss reserve release pushed net income for the consumer bank to $1.8 billion from a $700 million loss a year earlier.
Citi’s success in equities was tempered by a 43% slump in fixed-income trading. That aligns with results from JPMorgan and Goldman. Nonetheless, profit across the bank’s institutional clients group more than doubled to $3.82 billion.
The world’s largest card issuer saw mixed results in that silo, too. Although spending on cards increased 40%, revenue from that unit fell 11% as consumers paid off outstanding balances.
"The pace of the global recovery is exceeding earlier expectations and with it, consumer and corporate confidence is rising," CEO Jane Fraser said in a statement Wednesday. "While we have to be mindful of the unevenness in the recovery globally, we are optimistic about the momentum ahead."
The bank saw a 77% jump in the fees it took in by advising companies on mergers and acquisitions. Fees for underwriting debt fell 21%, however.
The bank’s net interest income — what Citi pockets on loan interest, less what it pays on deposits — fell 8%.
Wednesday’s report comes three months after Fraser announced the bank would be exiting 13 retail markets in Asia and Europe — an effort on which she gave a vague update positioned to be reassuring.
"We are making progress on our strategy refresh across our consumer and institutional businesses," Fraser said Wednesday. "Our overarching goal is to increase the returns we generate and close the gap with our peers. We have set out to modernize our bank and want to achieve nothing less than excellence in our risk and control environment, our operations and our service to clients."
Citi CFO Mark Mason reinforced that the bank would increase its spending on technology to satisfy the consent orders regulator issued in October related to persistent risk management, data governance and internal controls issues.
“We are making very deliberate decisions around the opportunities that we see across the franchise, and it’s the right thing to do, so we’re going to continue to do that,” Mason said, according to Bloomberg.
