Eurozone woes and bad assets hit Citi profits

 
Tim Wallace
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CITIGROUP profits fell again in the second quarter, its results revealed yesterday, as a loss on the sale of its stake in Turkish institution Akbank added to the headwinds it faces from the Eurozone crisis and a substantial drag from troubled assets left over from the financial crisis.

Net income came in at $2.95bn (£1.85bn), down 12 per cent from $3.34bn in the same three-month period of 2011, while revenues slid 10 per cent to $18.4bn. This is the bank’s the third consecutive fall in profits.

But the drop was smaller than markets expected, pushing shares up six per cent to $26.81 last night.

Citi lost $424m on the sale of its 10.1 per cent stake in Akbank and $920m on bad housing assets in Citi Holdings, while investment bank revenues slumped 21 per cent to $854m on lower market activity – in large part due to the uncertainty created by the Eurozone crisis.

But the bank continued to build up its capital buffers in advance of the Basel III rules coming into force.

Citi’s core tier one capital ratio now stands at 7.9 per cent under the latest guidelines, up from 7.2 per cent in the previous quarter. That is expected to hit eight per cent by the end of 2012.

Meanwhile chief finance officer John Gerspach sounded quietly confident on the Libor scandal.

“With Barclays’ Libor settlement it certainly raised questions about other Libor submitting banks,” he told the conference call, adding that Citi is co-operating fully with the authorities.

“But I would caution you that one should not infer from the situation of one Libor submitting bank that every bank is the same or similar.”