NEW YORK: Citigroup reported better-than-expected results Friday following a strong performance in trading, as executives described US consumption as healthy despite rising inflation.
The big US bank, like its peers, also suffered a drop in second-quarter profits compared with the year-ago period, which was boosted by the return of funds set aside early in the pandemic in case of loan defaults.
But unlike JPMorgan Chase and others, Citigroup still topped analyst expectations, in part due to higher profits in lending after Federal Reserve interest rate hikes.
Chief Financial Officer Mark Mason told reporters that Citi’s credit card business also had a “very, very strong performance,” indicating consumers remain on solid footing for now.
“There’s a lot of liquidity that still remains with consumers,” he said on a media conference call. “Obviously that is allowing for a bit more flexibility than they otherwise would have.”
But the continued spending is “hard to square” with data showing eroding consumer sentiment due to inflation, Mason acknowledged.
Citi reported profits of $4.5 billion, down 27 percent from the year-ago period on revenues of $19.6 billion, up 11 percent.
Citi had a net build of credit reserves of $375 million in case of bad loans.
Mason said the company “feels appropriately reserved” in case of a downturn, but saw no “signs of immediate credit loss concerns.”