Citigroup Q2 loss at $2.5 billion

India drives credit costs in Asia

Credit costs for the quarter, which stood at $4.5 billion, strained the bottomline of the bank. Higher credit costs were driven by global cards and consumer banking in North America, Citi said in a statement.     

In the consumer banking division, there was marginal growth in revenues while expenses rose 12 per cent, mainly due to higher business volumes and credit management costs.    
 
On consumer banking operations in Asia, Citi said, "...Higher credit costs were driven by increased losses and delinquencies in the unsecured loan portfolio, primarily in India, where the business is being actively repositioned to reduce costs and mitigate losses. Higher credit costs drove net income down 25 per cent."     

Credit costs jumped driven by higher net credit losses, up 84 per cent, and a $101-million incremental net charge to increase loan loss reserves, the statement said.     

For the latest quarter, Citi registered revenues of $18.7 billion and the global cards managed revenues rose 18 per cent, fuelled by "growth in average managed loans, up 11 per cent, and improved managed net interest margin".     

"We cut our second quarter losses in half compared to the first quarter. The cost of credit increased by 20 per cent from the first quarter, but write-downs in our Securities and Banking business dropped by 42 per cent. Additionally, headcount and expenses declined sequentially. While there is still much to do, we are encouraged by our progress in delivering on our commitment to re-engineering efforts," Citi's CEO Vikram Pandit said.