Reduced Loan Provisions Boost Citi Profits

Citigroup’s profits in the second quarter comfortably beat market estimates in part due to significantly reduced loan provisions driven by an outperforming global economic recovery.

Citi posted $6.19 billion in net income for the second quarter, according to its latest results, marking a nearly six-fold increase compared to last year.

Profits in the quarter exceeded the average analyst expectation of $4.26 billion, according to Refinitiv IBES data, though revenues fell 12 percent year-on-year to $17.5 billion.

This was due in no small part to a $2.4 billion reduction in loan reserves for losses that did not occur. Last year, the bank added $5.9 billion to its loan reserves.

By segment, the global consumer bank saw revenues shrink 7 percent due to decreased lending through cards resulting in $1.83 billion in income.

The institutional business saw revenues fall 14 percent to $10.4 billion which led to $3.8 billion of income.

Corporate and other divisions posted $532 million of income from $267 million of revenue, an 8 percent decrease.

Within Asia, the consumer bank generated $171 million of income from $1.57 billion of net revenue.

The investment bank posted $823 million of income from $2.24 billion of revenue.

The pace of the global recovery is exceeding earlier expectations and with it, consumer and corporate confidence is rising, said Citi’s chief executive Jane Fraser in a statement.