Citibank, Q1 Net Profit 48.2 Billion KRW...19.4% Decrease

Total Revenue Also Down 12.36% to 290 Billion Won
Interest and Non-Interest Income Both Decline
Poor Performance Becomes Obstacle to Retail Finance Sale

Korea Citibank announced its withdrawal from the domestic consumer finance sector. Photo taken on the 19th at the Korea Citibank headquarters in Jongno-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Song Seung-seop] Korea Citibank, which officially announced its withdrawal from the retail finance market, reported poor performance.

According to the disclosure on the 14th, Citibank posted a net income of 48.2 billion KRW in the first quarter. Compared to the previous quarter, it increased by 80.6% (27.6 billion KRW), but decreased by 19.4% (11.6 billion KRW) compared to the same period last year. During this period, total revenue also shrank by 40.9 billion KRW (-12.36%) from 330.9 billion KRW to 290 billion KRW.

Citibank explained, "Total revenue decreased due to low interest rates and reduced credit card consumption despite solid growth in the personal asset management sector."

Interest income and non-interest income also struggled. Interest income, which was 232.4 billion KRW in the first quarter of last year, shrank by 27.2 billion KRW (-11.7%) to 205.2 billion KRW. Non-interest income reported a decrease of 13.7 billion KRW from 98.5 billion KRW to 84.8 billion KRW.

However, in terms of soundness, as of March, the Bank for International Settlements (BIS) capital adequacy ratio improved by 1.49 percentage points from a year ago to 19.93%, ranking high in the industry. The common equity tier 1 ratio also increased by 1.39% to 19.10%. Regarding loan loss provisions, due to credit management amid the COVID-19 pandemic, it decreased by 40.1% compared to the first quarter of last year, amounting to 24 billion KRW.

Labor costs remain high and performance poor... Could this be an obstacle to retail finance sale?

In the expense sector, labor costs remained enormous, but marketing and overseas affiliate service expenses decreased, reporting 201.3 billion KRW, down 4.8% compared to the same period last year.

Customer loan assets and deposits increased by 1.3% and 6.3% respectively compared to the same period last year, reaching 24.6 trillion KRW and 28.5 trillion KRW. Return on assets and return on equity were 0.39% and 0.38%, respectively.

Citibank is currently prioritizing the sale of the entire consumer finance division. However, there are views that the division is large and there may be no buyers, and the possibility of selling by division is also being considered. From the perspective of potential buyers, low performance and high labor costs inevitably act as burdens.

President Yoo Myung-soon evaluated, "The first quarter performance reflects a difficult management environment," but also noted, "There were encouraging results in the capital market, personal asset management, and personal credit loan sectors." She emphasized, "We will maintain momentum across the business, accelerate digitalization, thorough risk and internal control management, and build ESG (environment, social, governance) management."

She added, "Regarding the consumer finance exit strategy, we will strive to find the best solution for both customers and employees."