The consequences of the pandemic reduced net profit by 46.5% over one year in the first quarter.
–
The American bank Citigroup announced on Wednesday a fall of 46.5% to 2.5 billion dollars of its net profit in the first quarter, due to a provision of 7 billion dollars to cover the possible unpaid debts of its customers due of the coronavirus crisis.
This sum will cover the future arrears of individuals and companies who may not honor their monthly payments, explains in a press release the third American bank by assets, which has a significant activity of consumer credit cards and a strong presence in Asia and in Latin America.
Managing Director Michael Corbat explains that the deteriorating economic situation caused by the coronavirus has forced the establishment to significantly increase the reserves.
“Our first quarter results were significantly impacted by the COVID-19 pandemic,” he said, quoted in the statement.
Like Citigroup, the other major American banks that have already published their quarterly results have set aside billions of dollars awaiting a cascade of defaults on their customers.
JPMorgan Chase has provisioned $ 8.3 billion, Bank of America $ 4.8 billion and Wells Fargo $ 4 billion. Goldman Sachs, which has a small retail banking business, set aside $ 937 million.
These estimates represent the top of their respective ranges because a new accounting rule, CELC, forces US banks to take the worst-case scenario into account when assessing subprime loans.
The sudden cessation of economic activity in the United States in mid-March was followed by the closure of thousands of businesses and SMEs, while large companies are idling after having laid off a large number of their employees . The factories are shut down.
The big companies, in search of cash, rushed to have immediate access to the lines of credit which the banks had opened to them to avoid going bankrupt.
Some 16 million Americans registered unemployed in late March and early April. Many households and SMEs find it difficult to pay their bills, their consumer loans and to honor their monthly payments.
Citigroup’s quarterly revenue increased 11.6% to $ 20.7 billion, mainly due to a 37% jump to 6.5 billion in revenues from speculative activities.
Brokerage of financial products linked to commodities, currencies and bonds (Fixed Income) stood out with a jump of 39% to $ 4.8 billion in revenue.
–
