Citibank Korea 2Q Net Profit 38.7 Billion Won... 21% YoY Increase Due to Decreased Labor Costs

Total Revenue Down 25% Year-on-Year but Large-Scale Voluntary Retirement Leads to Sharp Decline in Labor Costs

[Asia Economy Reporter Minwoo Lee] Although Korea Citibank's total revenue in the second quarter of this year decreased by about 24% compared to the same period last year, net income for the same period increased by about 21%. This was due to an improvement in net interest margin (NIM) from the interest rate hike despite the phased abolition of consumer finance, as well as reduced costs from decreased labor expenses following a large-scale voluntary retirement.

Korea Citibank announced on the 12th that it recorded total revenue of 210.9 billion KRW and net income of 38.7 billion KRW in the second quarter of this year. Total revenue decreased by 23.7% year-on-year, while net income increased by 21%. Interest income increased by 0.8% during the same period. This was explained as a result of improved NIM due to the interest rate hike despite a decrease in interest-bearing assets caused by the phased abolition of consumer finance. Non-interest income decreased by 88.5% compared to the same period last year, due to reduced revenue in asset management and bond-related income following the phased abolition of consumer finance.

As of the end of June, the BIS-based capital adequacy ratio and common equity tier 1 ratio stood at 17.26% and 16.52%, respectively, down 2.00 percentage points (P) and 1.93 P compared to the same period last year.

Costs in the second quarter were 145.6 billion KRW, down 28.6% year-on-year, mainly due to reduced labor costs. Earlier, Citibank decided to withdraw from retail banking and began accepting voluntary retirement applications from November. Among approximately 3,500 employees, about 2,300 applied for voluntary retirement, and around 2,100 are currently undergoing the process. It is known that Citibank spent 1.192 trillion KRW (after deducting 95.9 billion KRW in retirement benefit adjustment income) on voluntary retirement costs last year alone.

Loan loss expenses also decreased by 53% year-on-year to 14.4 billion KRW. This is interpreted as a result of reduced loan write-offs following the phased abolition of consumer finance and the consequent decrease in loans.

As of the end of June, customer loan assets stood at 20.4339 trillion KRW, down 16.4% year-on-year. Deposits were 24.5052 trillion KRW, down 15.9% during the same period. The loan-to-deposit ratio was recorded at 81.3%. The return on assets and return on equity for the second quarter were 0.3% and 2.8%, respectively.

Myung Soonsun, CEO of Korea Citibank, said, "As a result of successfully executing the strategy of investing in and supporting the corporate finance division in the second quarter of this year, the revenue of the corporate finance division grew significantly, exceeding 25% compared to the same period last year. We are smoothly progressing with the phased abolition of the consumer finance division, prioritizing customer protection and support, and based on the second quarter's performance, we will achieve customer growth and sustainable growth of Citibank through focused investment in the corporate finance division."