By David Benoit 

Citigroup Inc. said Wednesday its first-quarter profit plunged 46%, after the bank set aside nearly $5 billion to prepare for the wave of loan defaults.

Citigroup's profit for the first three months of the year fell to $2.52 billion, or $1.05 per share, from $4.71 billion, or $1.87 a share. Analysts had expected $1.07 a share, according to FactSet, a forecast that has been cut in half since late February.

Revenue rose 12% to $20.73 billion, compared with $18.58 billion a year earlier and the $19.03 billion analysts expected.

The revenue gains were powered by Citigroup's investment bank, which benefited from the volatile markets to post a strong quarter in trading.

Citigroup increased its loan loss provision, money for loans it now thinks can go bad, by $4.92 billion, from just $278 million in the prior quarter, partly reflecting an accounting change as well as concerns about the economy. Of that, $2.85 billion came in the consumer bank and another $1.88 billion in the corporate bank. Its total provision in the quarter was $7 billion.

Citigroup shares have fallen 43% this year through Tuesday, worse than the KBW Nasdaq Bank Index's 37% drop and the S&P 500's roughly 12% retreat. Shares slid 3.3% to $43.90 in premarket trading.

Citigroup has offices around the world, giving it an early view into the spread of the virus. The bank moves money around the world for governments and multinational corporations, but is confronting a global slowdown that has all but brought the economy to a halt. At the same time it is grappling with how to keep operations running as the virus has spread throughout the U.S. and in its headquarters city, New York.

The first-quarter results are likely only the first sign of a painful contraction that could get much worse. JPMorgan Chase & Co. and Wells Fargo & Co. reported sharply lower earnings Tuesday after socking away billions of additional dollars for potentially bad loans.

The brunt of the potential loan problems were in the consumer bank. Its revenue rose 1% to $8.17 billion but the credit costs sent it to a $754 million loss. The bank said total spending on its credit cards was flat from the year ago and down 16% from the prior quarter.

In the institutional group that serves large companies around the globe, revenue jumped 25% to $12.48 billion and profit rose 7%.

The markets group recorded a 39% gain in revenue, with equities and fixed income both up by the same. The institutional division also had a sizable gain on the value of hedges it keeps on corporate lending.

Citigroup's North America revenue rose 23%, bolstered by the trading increase. Asia, which faced an earlier outbreak of the virus, was up 7%, also thanks to the investment bank.

Write to David Benoit at david.benoit@wsj.com

 

(END) Dow Jones Newswires

April 15, 2020 09:07 ET (13:07 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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