by David Henry and Manya Saini
(Reuters) – Citigroup Inc reported a 46% plunge in quarterly profit on Thursday due to provisions made to guard against potential losses from its exposure to Russia, a drop in commissions and a collapse in underwriting and increased expenses.
The American bank provisioned an additional 1.9 billion dollars (1.75 billion euros) during the quarter to protect itself against possible losses linked to Russia and the economic impact of the war in Ukraine.
This operation had the effect of increasing the cost of credit to $755 million, which contrasts with the $2.1 billion withdrawn last year from reversals of provisions previously set up due to the COVID-19 pandemic.
Citigroup says it has reduced its exposure to Russia to $7.8 billion from $9.8 billion in December. If the conflict follows a very adverse scenario, it would now lose no more than 3 billion dollars, against nearly 5 billion dollars estimated last month.
The bank’s net profit fell to $4.30 billion, or $2.02 per share, for the quarter ended March 31, from $7.94 billion, or $3.62 per share, a year earlier. earlier.
Analysts on average had expected earnings of $1.55 per share, according to data from Refinitiv IBES.
The bank’s total revenue for its part fell 2% in the first quarter to $19.2 billion, a decline due to a 43% drop in investment banking activities.
The rush of investors last year towards transactions involving SPACs (special purpose acquisition companies), – companies with no operational activity, “blank checks” – is no longer relevant today, which has weighed on underwriting fees.
“Although the geopolitical and macroeconomic environment has become more volatile, we are implementing the strategy we announced at our recent Investor Day,” said Jane Fraser, the bank’s chief executive.
(Report Manya Saini in Bangalore and David Henry in New York; French version Diana Mandiá, editing by Jean-Michel Bélot)
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