NEW YORK (AP) – Citigroup’s profit rose more than fivefold from a year earlier, boosted by an improved economy that resulted in fewer problem loans on the bank’s balance sheet.
Citi is the last major bank to see strong earnings this quarter, along with JPMorgan Chase, Bank of America and Goldman Sachs. They all saw a one-time boost in bottom line because they were able to reclaim some of the billions of dollars they spent last year to protect against customer defaults.
The New York bank said it earned $ 6.19 billion, or $ 2.85 per share. That’s more than earnings of $ 1.06 billion, or 38 cents a share, in the same period a year earlier. The results were significantly better than analysts’ expected earnings of $ 1.97 per share, according to FactSet.
Like other big banks, Citi was able to move previously bad loans into the “good” side of its balance sheet as the economy improved after vaccinations became more widespread. Citi was able to free $ 2.4 billion from its loan loss reserves, compared with the $ 5.94 billion it should have poured into reserves a year earlier.
The global economic recovery is faster than previous expectations, and with it consumer and corporate confidence is growing. While we must be mindful of the uneven recovery in the world, we are optimistic about the future, ”said Jane Fraser, CEO of Citigroup.
The improved balance sheet can be seen in Citi’s consumer banking franchise. The division reported profit of $ 1.8 billion for the quarter, compared with a loss reported a year earlier. Last year’s losses were entirely due to Citi saving money to cover potentially bad loans.
Citi’s trading revenue declined for the quarter, reflecting how the markets have calmed down in the past year. The second quarter of 2020 was a period of high volatility as investors navigated the social and economic fallout from the coronavirus pandemic, providing traders with opportunities to generate profits.
Citi’s Institutional Clients Group, which includes its sales offices, had total revenues of $ 10.39 billion for the quarter, down 14% from a year earlier. The total revenue of the entire firm was $ 17.5 billion.