Citigroup’s Second Quarter Profit Plunges 73%, But Still Beats Analysts’ Forecasts

U.S. banking giant Citigroup (C) saw its second quarter profit plunge by 73% as it set aside large loan loss reserves, but its results still beat analysts’ expectations.

Citigroup recorded a profit of $1.32 billion, or $0.50 per share, down from $4.8 billion, or $1.95 per share, in the year ago quarter.

Nonetheless the latest results exceeded average analyst estimate of $0.35 per share.

Revenue at Citi climbed by 5% to $19.77 billion.

Citi’s corporate and investment bank was buoyed by its trading business, where revenue jumped 55%. Fixed-income trading generated $5.6 billion in revenue, a 68% surge.

But revenue at the bank’s consumer operations dropped 10% to $7.34 billion, while spending volume on the bank’s credit cards plunged 24%.

Moreover, the lender’s loan-loss provision included $2.21 billion in net charge-offs and another $5.7 billion which Citi added to its reserves for loans.

Citigroup had already set aside $7.03 billion in the first quarter for loan losses and had a total $28.28 billion allowance for loan losses as of June 30.

Citi and other banks are preparing for a wave of loan defaults by customers and businesses as the coronavirus spreads.

Citi, the third largest credit card issuer in the U.S., offered forbearance on 2 million credit card accounts representing 6% of its balances.

“While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well,” said CEO Michael Corbat. “With a sharp emphasis on risk management, we are prepared for a variety of scenarios and will continue to operate our institution prudently given this unprecedented situation.”

The bank also said in late June it will keep paying its quarterly dividend after acing the Federal Reserve’s annual stress test.