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Estimates to lose less than $3 billion due to conflict, down from $5 billion
On Thursday, Citigroup Inc (NYSE: C) reported that the bank saw a 46% drop in first-quarter profit as it took hits from losses related to the Russia-Ukraine war, a slump in underwriting fees, and higher expenses.
The US bank said its net income fell to $4.30 billion, or $2.02 per share, for the quarter ended on March 31, from $7.94 billion, or $3.62 per share, a year earlier.
However, the bank performed better than expected in terms of Wall Street estimates. Analysts had expected a profit of $1.55 per share.
Shares of Citi jumped nearly 3.5% on Thursday in the early trading session.
Citi’s revenue fell 2% to $19.2 billion in the quarter, affected mainly due to a 43% fall in revenue from investment banking as the rush of SPAC deals, which were seen last year, tapered off, affecting the underwriting fees.
Revenue from Treasury and Trade Solutions - Citi’s crown jewel business - rose 18% due to higher net interest income and fee growth.
Safeggroupuards from Russia-Ukraine conflict
Citi said it added $1.9 billion to its reserves in the quarter to better protect itself from losses incurred from direct exposures in Russia and the economic impact of the geopolitical crisis, pushing the credit costs to $755 million.
However, the bank benefitted $2.1 billion a year ago when it freed up loss reserves built during the COVID-19 pandemic.
The New York-based bank said it had reduced its exposure to Russia to $7.8 billion, from $9.8 billion in December, and estimated to lose no more than $3 billion if the conflict follows a severely hostile situation down from nearly $5 billion.
“While the geopolitical and macro environment has become more volatile, we are executing the strategy we announced at our recent Investor Day,” Chief Executive Officer Jane Fraser said in a press release.
Picture Credit: FT
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