Citi posts ‘solid’ Q2 results, despite losses due to global crisis
Citi, the third largest US bank by assets, announced a fall in second quarter profits and revenues, due to the sale of a stake in Turkey’s largest bank and other troubled assets it sold off after the 2007-08 crisis.
Net income declined 12% to $2.9bn, from $3.34bn last year. Part of the loss was due to the sale of the 10.1% stake in Turkish bank Akbank TAS, a loss of $424m. Citi Holdings, which holds bad assets from the crisis, lost $920m, a significant increase on last year’s loss of $661m. Revenues were down 7% at $18.8bn.
Citigroup chief executive Vikram Pandit (pictured) said: “Our core businesses performed well in a difficult environment and are generating solid returns. We had strong growth in both loans and deposits, showed resilience in our markets-facing businesses, and saw record revenues in Transaction Services.” Shares in Citigroup rose 3.4% in premarket trading.
Co-ordinated with the announcement of the Q2 results, Pandit gave a rare press interview promising a change in the bank’s culture. His promise implicitly recognised the need to placate restless shareholders at a time when the banking sector is facing unprecedented criticism. The Libor scandal that has engulfed Barclays Bank is widely expected to spread to other banks, and to result in changes to working practices in the sector. Citigroup has not been involved so far.
Speaking to the Daily Telegraph, Pandit said: “I think culture and leadership are essential pieces of the fabric of a bank. For us this is a culture and strategy based on practising responsible finance.” He said in 2008 “the bank set out on a journey to make sure that Citi had the right strategy. Fundamental to the strategy is having the right culture. For us this is a culture and strategy based on practising responsible finance.
He described the process as ‘going back to basics’. He said: “You know what that is? It’s about three questions. Before we transact, before we interact with our clients, we ask ourselves is it right for my client? Does it add any economic value? And is it systemically responsible? We should only proceed if the answer is yes to all three.