Citigroup Q2 income falls 17% on asset sale, banking revenue decline

Citigroup said Friday its second-quarter net income fell 17% from a year ago as it continues to shed non-core assets and consumer banking revenue declined.

Net income for the quarter was $4 billion down from $4.8 billion a year ago. Adjusted earnings per share of $1.24 beat Wall Street's estimate of $1.10 by the analysts who were polled by S&P Global Market Intelligence.

Revenue declined 10% to $17.5 billion as Citigroup continues to sell off the businesses in Citi Holdings, the unit it created following the 2008 financial crisis to house non-core assets it plans to sell. Citi Holdings' revenue fell 56%. .

"These results demonstrate our ability to generate solid earnings in a challenging and volatile environment," Citigroup CEO Michael Corbat said in a statement. "Nearly all of our net income came from our core businesses and we continued to reduce non-core assets in Citi Holdings."

Like other large banks, Citigroup has been trimming assets and seeking to become leaner in operations. It cut operating expenses by 5% to $10.4 billion in the period.

Citigroup’s allowance for loan losses fell to $12.3 billion at the end of the quarter end, or 1.96% of total loans. That compares to $14.1 billion, or 2.25% of total loans, in the year-ago period.

Deposits rose 3% to $938 billion.

Citicorp, the company's largest unit that runs its core businesses in consumer banking, credit cars and institutional client services, reported a 3% revenue decline to $16.7 billion. Its net income decreased 13% to $3.9 billion due to falling revenues and higher cost of credit.

Citicorp's global consumer banking business generated $7.7 billion in revenue, a 6% decline. Credit card revenue in North America fell 1% to $1.9 billion as higher reward costs ate into a "modest benefit" from the acquisition of the Costco portfolio. Citicorp is now the exclusive credit card partner of Costco, which ended a similar relationship with American Express earlier this year.

Retail banking revenue fell 4% to $1.3 billion as its mortgage loan volume fell.

Institutional client revenue rose 2% to $8.8 billion as the securities services business grew. Revenue for fixed income products, including trading and securitization, increased 14% to $3.5 billion. Equity revenue was up 21% to $788 million.

Citi Holdings revenue tumbled 57% to $843 billion as it continues to shed assets. As of the end of the second quarter, the unit's assets totaled $66 billion, or 47% lower than a year ago. It has deals in place to lower assets by an additional $7 billion, the company said.

Follow Paste BN media reporter Roger Yu on Twitter @ByRogerYu.