Turkish bank sale drags Citi's net profit down 12pc
Citigroup's net income fell 12pc in the second quarter, partly due to a loss on the sale of its stake in a Turkish lender. The income of $2.9bn (€2.3bn) was still better than analysts were expecting.
Citi, which employs more than 2,000 people in Ireland, is one of the largest global banks in the world and its results are often seen as a gauge of how the global economy is doing.
Investors are particularly concerned about recent signs of a slowdown in China and India, two large markets for Citi. Citi's consumer banking business in Asia and Latin America barely declined by less than 1pc.
"We are largely an urban bank in Asia, and cities are growing," Vikram Pandit, Citigroup's CEO, said.
"Urbanisation is a very powerful trend. Middle class is growing. People are coming in the cities. That's what drives our business."
In a separate conversation with journalists, Citi's chief financial officer John Gerspach said the strength in the dollar versus other currencies had a negative impact on the bank's earnings from overseas.
Mr Gerspach said the Mexican peso depreciated about 5pc in the quarter and the Brazilian real about 11pc.
Without the effect of currency depreciations, Mr Gerspach said, Citi's overseas business grew. Mr Gerspach said Citi was excited about the opportunities for growth in those two countries, especially in credit cards.
As more of its customers paid back loans on time, Citi kept aside less for future losses. The bank reserved $27.6bn at the end of the quarter, compared with $34.4bn in the same period a year ago.
"Many markets are slowing down and we worry that it could hit the credit quality of customers," said Citi shareholder Gary Townsend.
"Citi executives indicated that they don't see any discernible change and that is an important takeaway."
The bank drew down its current loan loss reserves by $984m and took an accounting gain of $219m because the value of its debt decreased.
Both of those items padded earnings.
Citi lost $424m on the sale of its one-tenth ownership stake in Akbank. Excluding that loss and the accounting gain, Citi's net income was $1 per share, exceeding the 89 cents expected by analysts. (AP)