Citigroup's profit falls 17 percent

By Ken Sweet AP Business Writer NEW YORK (AP) - Citigroup's earnings fell 17 percent in the second quarter, hurt by weak results in consumer banking as interest rates remain extremely low, making lending less profitable. The results still beat analysts' forecasts, however. The New York-based financial conglomerate said it earned net income of $4 billion last Friday, or $1.25 per share, compared with $4.85 billion, or $1.51 per share, in the same period the year earlier. The results beat the $1.10 per share analysts had expected, according to FactSet. Revenue fell 10 percent to $17.54 billion, beating the $17.52 billion analysts expected. "These results demonstrate our ability to generate solid earnings in a challenging and volatile environment, again highlighting the resilience of our institution," said Citigroup CEO Michael Corbat in prepared remarks. Like its competitor JPMorgan Chase, Citigroup had a strong quarter in its trading operations that helped boost its profitability, while its consumer banking franchise remained under pressure. Citi reported revenue in its markets and securities services division of $4.7 billion, up 10 percent from a year earlier. Trading was boosted by the U.K.'s vote to leave the European Union, which caused a surge in market volatility in the last days of the quarter. Also like JPMorgan, Citi's investment banking division saw a slowdown in the quarter as market volatility and political unrest caused companies to stall plans for mergers or other deals. Investment banking revenues fell 6 percent to $1.2 billion in the quarter, advisory revenues were down 7 percent and underwriting revenue for stock plunged 41 percent in the quarter. Citi's consumer banking business had net income of $843 million, down 22 percent from a year ago, as Citi continued to shrink its operations in the U.S. and abroad. Unlike the other major consumer banks, Citi's consumer banking business is primarily outside the U.S., especially in Asia and Latin America. And low interest rates are not helping either. Like Wells Fargo, Citi's net interest margin - a measure of a bank's profitability - fell to 2.86 percent in the quarter from 2.95 percent a year ago. Citi Holdings, the so-called "bad bank" that Citi stored its toxic assets from the financial crisis, continued to shrink. Total assets in Citi Holdings were $66 billion, down 47 percent from a year earlier. Citi said it has plans to sell off an additional $7 billion in assets. But as Citi sells off assets in Citi Holdings to wind down that unit, revenue there has also dwindled. Total revenue for Citi Holdings was $843 million in the quarter, less than half of what it was a year ago. Citigroup's stock is down roughly 15 percent so far this year. Published: Tue, Jul 19, 2016