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Citi profits fall as recession and layoffs bite




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Citigroup’s profits fell by more than a third last quarter, hit by lower corporate spending, a lack of deals and a costly round of layoffs.

The New York-based bank reported $2.9 billion in net income, down from $4.5 billion in the same period last year. Revenue fell 1[ads1] percent to $19.4 billion in a quarter marked by growing fears of a US recession.

Revenue at Citi’s large cash management and payment processing unit, which caters to corporates, rose just 15 percent, less than half the 32 percent growth in the same period last year.

Like its rivals, Citi was unable to escape the sharp decline in deal-making. Income from corporate and investment banking fell 44 per cent in the quarter, while fees from the market business – trading shares and bonds on behalf of clients – fell 13 per cent.

The weakness across several of its businesses led the bank to announce plans to cut as many as 5,000 employees last month. During the quarter, Citi’s expenses rose by more than $1 billion, mostly related to layoffs.

“Against a challenging macroeconomic backdrop, we continued to see the benefits of our diversified business model and strong balance sheet,” Citi CEO Jane Fraser said Friday. “In banking, the long-awaited recovery in investment banking has yet to materialize, making for a disappointing quarter.”

However, a still resilient US consumer proved to be a bright spot for Citi. Income from Citi’s credit card business rose by 27 percent in the period, which helped the bank’s overall profit beat Wall Street’s expectations.

As the Federal Reserve signals its willingness to keep raising interest rates to bring down inflation, Citi expects more of its loans to sour. The provision for loan losses in the quarter increased by almost 40 per cent to 1.8 billion dollars. Its overall lending in the quarter was little changed from a year ago.

Deposits came in almost unchanged from the previous quarter. Analysts had warned that banks, even the big ones, could see deposit outflows this quarter as consumers hunt for higher-yielding investments.

Citi is still struggling to regain its footing a decade and a half after the financial crisis. Fraser, who took over in 2021, has led the bank through a restructuring, pulling Citi out of underperforming businesses and closing branch networks around the world in a bid to cut costs.



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