NEW YORK (AP) — Citigroup profits jumped more than five fold from a year earlier, helped by an improving economy that resulted in fewer bad loans on the bank’s balance sheet.
Citi is the latest big bank to see profits soar this quarter, along with JPMorgan Chase, Bank of America and Goldman Sachs. All of them got a one-time boost to their bottom lines because they were able to reverse some of the billions of dollars set aside last year to guard against customer defaults.
The New York-based bank said it earned $6.19 billion, or $2.85 a share. That’s up from a profit of $1.06 billion, or 38 cents a share, in the same period a year earlier. The results were significantly better than the $1.97-per-share profit that analysts had expected, according to FactSet.
Like other big banks, Citi was able to move previously bad loans onto the “good” side of its balance sheet as the economy had improved since vaccinations have become more widespread. Citi was able to to release $2.4 billion from its loan-loss reserves, compared to the $5.94 billion it had to put into those reserves a year earlier.
The pace of the global recovery is exceeding earlier expectations and with it, consumer and corporate confidence is rising. While we have to be mindful of the unevenness in the recovery globally, we are optimistic about the momentum ahead,” said Jane Fraser, Citigroup’s CEO, in a statement.
The improving balance sheet can be seen in Citi’s consumer banking franchise. The division reported a $1.8 billion profit in the quarter, compared to the loss it reported a year earlier. Last year’s loss was entirely tied to Citi putting away funds to cover potentially bad loans.
Citi’s trading revenue declined in the quarter, ä reflection of how markets have calmed in the past year. The second quarter of 2020 was a period of high volatility as investors navigated the social and economic impacts of the coronavirus pandemic, which provided opportunities for traders to profit.
Total revenues in Citi’s institutional clients group, which includes its trading desks, was $10.39 billion in the quarter, down 14% from a year earlier. Total revenue across the entire firm was $17.5 billion.