Citigroup profits rise 42% amid deep cost-cutting programme

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Citigroup posted a 42% rise in second-quarter earnings on Monday as the bank cut costs and profited from its growing international lending operations.

The bank reported a profit of $4.18bn compared with $2.94bn in the period a year earlier. Revenue's at the nation's third-largest bank were up 12% compared to the same period last year at $20.5bn.

Citigroup received one of the biggest government bailouts following the credit crisis and struggled to refocus its sprawling business after the financial collapse.
Michael Corbat, the chief executive, took over from predecessor Vikram Pandit last October after shareholders lost confidence in him and voted against his $15m pay packet.

Corbat, a 29-year veteran of Citigroup, announced deep cost-cutting plans when he took the top job, including plans to eliminate 11,000 jobs. He previously headed Europe, the Middle East and Africa and has focused on continuing the bank's expansion overseas. More than 50% of the bank's revenues now come from outside the US.

"Our businesses performed well during the quarter, and these results are well balanced through our products and geographies, especially in the emerging markets, where growth is being challenged," said Corbat.

But in a conference call on Monday, the bank warned that emerging markets remained volatile. Growth is slowing in China and Mexico, for example. "Mexico shocked everyone," John Gerspach, the bank's chief financial officer, said.
Gerspach also warned that US consumers were still wary of taking on new debt after the recession. "The US consumer is still going through a period of de-leveraging," he said.

The bank has also continued to sell businesses as it has cut costs. In the second quarter, Citigroup sold $18bn worth of assets, including the remainder of its stake in the Morgan Stanley Smith Barney brokerage and reached deals to sell its consumer lending units in Turkey and Uruguay.

Powered by Guardian.co.ukThis article was written by Dominic Rushe, for guardian.co.uk on Monday 15th July 2013 16.25 Europe/London

guardian.co.uk © Guardian News and Media Limited 2010

 

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