Investors pile into Citigroup as US bank slashes costs to shore up income
Citigroup’s profits hit an eight-year high in the first quarter of 2015, as falling costs indicated the lender is becoming leaner and more efficient.
The giant banking group hit the buffers in the financial crisis, and has spent years since slimming down and turning its operations around.
Revenues slid two per cent on the year, coming in at $19.7bn (£13.2bn), but the bank managed to slash its operating expenses by 10 per cent, falling to $10.9bn.
As a result, Citi’s profits came in at $4.9bn for the three-month period, up 21 per cent on the year.
The lender cut 9,000 staff over the year, taking its headcount to 239,000.
That helped it cut pay and benefits spending by eight per cent to $5.5bn.
At the same time it cut premises and equipment spending by 12 per cent to $709m, and advertising spending by 14 per cent to $392m.
On top of those efficiency savings, the economic recovery helped the bank – its net credit losses dived by 20 per cent on the year to $2bn.
Wider revenues were mixed, with North American consumer banking and Asian investment banking performing strongly, but revenues falling in Latin American consumer banking.
“While some businesses faced revenue headwinds, we grew loans and deposits in our core businesses and gained wallet share among our target clients,” said chief executive Michael Corbat. “We tightly managed our expenses, helping to achieve positive operating leverage in Citicorp and we are on track to hit our financial targets for the year.”
The bank’s shares rose 1.2 per cent in New York yesterday.