For banks this earnings season, it’s variations on the “reserve release” theme. It’s a common refrain now — and Citigroup joins the fray.
Second-quarter results from the bank came in on Wednesday (July 14) – and, like J.P. Morgan, Bank of America, et al, the reversals for loan losses that never materialized helped boost earnings. The company recorded a $1.1 billion reversal, which brought earnings to $2.85 a share.
Citigroup posted second-quarter results that benefited from a $1.1 billion boost from releasing reserves the bank had set aside for loan losses. Earnings of $2.85 a share were significantly better than consensus. Elsewhere, revenues of $17.5 billion, though down about 12 percent year on year, were also better than the $17.2 billion the Street had estimated.
Beyond the vagaries of Wall Street trading and investment banking activities — and training an eye on consumer spending — management said in the earnings release, on the conference call with analysts and in supplementals that the economic recovery has been strong, and that consumers and firms are showing increased confidence.
In a nod to treasury services, management said on the conference call with analysts that several initiatives are focused on digital transformations, and that the company continues to move trillions of dollars daily — management noted that fee growth year over year stood at 20 percent in Treasury and Trade Solutions (TTS). The TTS segment had $644 billion in end-of-period deposits, while revenues from this segment stood at $2.3 billion, up 6 percent from the first quarter.
Consumer Activity
Purchasing on the company’s cards in North American banking operations stood at $104 billion, up 21 percent from the first quarter of this year and up 40 percent year on year. But in a nod to consumers’ desires to carry less debt, the branded cards’ average loans were down 4 percent year over year, with average loans of $79 billion in the quarter.
In reference to digital growth, the company said that active digital customers were up 3 percent year over year to 21 million, while active mobile customers stood at 13 million, up 6 percent year over year. NCLs (non-conforming loans) were down 44 percent in North America, on lower loan volumes and lower delinquencies. The credit trends remain favorable within an environment where consumers have more liquidity due to stimulus and other relief programs.
In the international segment, the card average loans were down 8 percent year over year to $21 billion. Card purchase sales stood at $24 billion, surging 26 percent from last year.
In the international segment, active mobile customers were up 12 percent year over year to 15 million, while the active mobile customer tally was up 17 percent year over year to 13 million.
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