Citigroup’s profits were hit in the first quarter by fallout from the war in Ukraine as the US bank set aside $1.9 billion for potential loan losses and continued to seek an exit from its loan business. retail in Russia.
Rising credit costs due to rising defaults, in addition to a slowdown in revenue, drove earnings down 46% to $4.3 billion, or $2.02 per share, a Citi said Thursday.
However, the result still exceeded analysts’ estimates of $3 billion, according to FactSet data.
The long-planned sale of Citi’s Russian retail business is stuck in legal limbo and the bank said last month it could face losing “just under half” of its domestic exposure, which fell to $7.8 billion this quarter, from $9.8 billion.
The fallout from the war is another challenge for chief executive Jane Fraser, who outlined her plan to improve profitability at the struggling US lender days before the Russian invasion began.
The bank did not provide an update on the Russian sale process on Thursday, but harsh sanctions imposed by Western governments after the Feb. 24 invasion made it unlikely that Citi could leave the company without facing further challenges. losses.
French lender Societe Generale said it would take a €3.1 billion hit after agreeing to sell its Russian retail bank to an investment firm founded by billionaire Vladimir Potanin earlier this week.
The Russian operations of other major US banks have been mostly limited to investment banking and have so far been less expensive to unwind. JPMorgan Chase, the largest U.S. bank, which reported results on Wednesday, earmarked about $300 million for potential loan losses associated with Russian entities in its corporate banking and asset management divisions.
Citi shares rose 3% in early trading as the impact of the war was less than expected and results were otherwise better than expected.
Total revenue fell 2% to $19.2 billion, but topped analysts’ expectations by $1 billion, according to FactSet. Strong growth in Citi’s wholesale payments business mitigated the sharp decline in investment banking fees felt on Wall Street.