On Thursday, the company reported significantly higher earnings in the first quarter and announced that most of its consumer banking operations in Asia, Europe and the Middle East will be suspended.
The bank posted a profit of 7.9 billion $ 2.62 per share, well above the $ 2.60 per share projections forecast by analysts surveyed by FactSet. A year earlier, Citigroup had reported quarterly earnings of around $ 2.5 billion, or $ 1.05 per share.
Citigroup also announced that it will cease consumer activities in 13 countries, mostly across Asia to focus on wealth management and other businesses.
Who took over as chief executive officer last month, said in a statement that these consumer banks are great companies, but « we don’t have the scale we need to be competitive. » She said Citigroup will continue to invest in wealth management and the companies that work with corporate clients in Asia.
Citigroup is a giant on Wall Street but relatively small in US consumer banking, a combination that some analysts and investors have criticized it. Ms. Fraser said in January that the bank will be restructuring the companies that manage money for high net worth clients with the aim of reaching clients sooner and keeping them as they get richer. The bank announced Thursday that it will operate consumer banking in four “wealth centers” where it expects strong growth for the wealth management business: Singapore, Hong Kong, United Arab Emirates and London.
Citigroup’s brand in some overseas markets is strong, but the consumer banks there are relatively small and expensive. Income from the operations that the bank runs accounted for approximately $ 4 billion of Citigroup’s 2020 sales of approximately $ 74 billion. Their spending was around $ 3 billion, compared to a total spend of around $ 43 billion in 2020.
« We want to be very clinical about the companies that we want to keep and where we can secure leading market positions, » said CFO Mark Mason when he called reporters.
In the first quarter, Citigroup’s total sales were down 7% to $ 19.3 billion. This was still above the expected $ 18.8 billion that analysts were expecting.
In the same period a year ago, the coronavirus pandemic had hit the US, and major banks, including Citigroup, allocated billions of dollars to prepare for potentially bad credit.
Reserves weighed on earnings for much of last year, but the major credit losses have not occurred so far, thanks in part to government stimulus measures that have kept the economy alive. Banks’ first quarter results rose in part because their prior year results were hit so hard by their pandemic preparations.
New York-based Citigroup has released $ 3.85 billion in reserves, a key driver of first quarter earnings. The bank released $ 1.5 billion in the fourth quarter.
A crazy market quarter marked by a boom in special purpose vehicles and stock market records helped power other major Wall Street banks.
& Co. and
Goldman Sachs Group Inc.
Both reported record quarterly profits on Wednesday.
Citigroup did not catch all waves. Investment banking revenues increased 46%, largely due to an increase in new IPOs, SPACs, and other stock sales. Goldman and
Bank of America Corp.
all notched profits.
Citigroup’s retail sales were largely unchanged and increased 1%. Trading sales rose 47% for Goldman and 25% for JPMorgan. Bank of America’s adjusted trading sales increased 17%.
Mr. Mason said continued economic uncertainty among corporate customers, coupled with high levels of liquidity, weighed on the company’s Wall Street operations.
« I think , Customers agree that the recovery and growth will be asynchronous, « said Mason. « And they too are viewing many of the same signs we talked about as signals of recovery. »
Spending rose 4% to $ 11.1 billion, in part due to the bank’s efforts to revise their risk and control systems. Investors have been watching this line closely after regulators ordered Citigroup to make material changes to its risk system.
Profit in the institutional client group, which includes investment banking and trading, rose 64% to 5 .9 billion, but revenue declined 2% to $ 12.2 billion.
The consumer bank posted a profit of $ 2.2 billion compared to a loss of $ 740 million last year. However, sales fell 14% to $ 7 billion.
Citigroup shares fell slightly on Thursday, but are up around 18% since the start of the year. The KBW Nasdaq Bank Index, which tracks the stocks of the largest lenders, is up 26% so far this year, compared with a 10% gain for the S&P 500.
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