Citi’s Earnings Rise Despite Downward Pressure on Mortgage Revenue

Citigroup in its second-quarter earnings release Monday showed some concern about downward pressure on mortgage revenue, but overall its net income was up at $4.2 billion, or $1.34 per diluted share, compared to $2.9 billion, or 95 cents per diluted share, in last year’s second quarter.

Compared to 2Q 2012, retail banking revenue in the second quarter was down 4% at $1.6 billion “reflecting lower mortgage origination and servicing revenues and ongoing spread compression, partially offset by a gain of approximately $180 million on the sale of a mortgage portfolio during the quarter.

“Retail banking revenues are expected to continue to be negatively impacted by lower mortgage origination revenues,” the company noted.

But the company said asset quality overall improved during the second quarter of this year, with total nonaccrual assets dropping to $10.1 billion, down 12% from the second quarter of last year. Within that category, consumer nonaccrual loans fell 9% from the year-ago quarter to $7.6 billion.

“The decline in consumer nonaccrual loans…occurred despite the third-quarter 2012 OOC guidance regarding the treatment of mortgage loans where the borrower has gone through Chapter 7 bankruptcy, which added $1.5 billion to consumer nonaccrual loans,” according to Citi.