Citi 1Q profit falls 46% as virus hits US, global customers
Source: AP
NEW YORK (AP) — Banking conglomerate Citigroup says first-quarter profit dropped 46% as it set aside billions to cover potentially bad loans. Citi set aside $7.03 billion for loan losses this quarter, up from $1.98 billion in the same period a year earlier. Citi is a large credit card issuer, focused primarily on consumers who keep and revolve a balance. Those customers are now at greater risk of default because many of them have lost their jobs. Citi also has a large international banking franchise and lends to companies around the globe, and some could default on their loans as business dries up.
Bank of America reported Wednesday that its quarterly profits dropped by 45% from a year ago, the latest major bank to say it took a hard hit from the coronavirus pandemic.
Like JPMorgan Chase and Wells Fargo, Bank of America had to set aside billions of dollars to cover potentially bad loans. Many of these loans were fine only weeks ago, but the pandemic has caused companies to shutter and millions of Americans to be put out of work.
The amount of money BofA set aside for loan losses nearly quintupled from a year ago, from $1.01 billion to $4.76 billion. The losses came from the bank’s consumer lending division — BofA is a large credit card issuer and has a massive consumer banking business. The bank also reserved for bad loans in its lending division to businesses.
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