Citigroup’s profit almost half as loan defaults loom
(Finance) – Citigroup reported a plunge of 46% in quarterly profit as it set aside nearly $5 billion to prepare for the flood of loan defaults owing to a virtual halt in economic activity as a result of the coronavirus pandemic.
The coronavirus outbreak has affected businesses worldwide, putting millions of people out of work in the U.S. alone and it is expected to lead to the deepest recession of recent times.
Citigroup recorded a $4.89 billion expense to increase its reserves against anticipated losses on loans, primarily from its credit cards. This can be attributed to rising unemployment.
Lenders with more credit card and unsecured loans exposure are more susceptible to hefty writedowns. Credit card delinquencies have historically risen in lockstep with unemployment.
(Photos syndicated via Reuters)
This story has been edited by BH staff and is published from a syndicated field.