Citigroup is setting aside hundreds of millions of extra dollars to cover potential loan losses. This move comes in response to the current uncertain economic climate.
Increased Loan Loss Reserves
According to reports, Citigroup’s head of banking, Vis Raghavan, recently warned that the bank anticipates significantly higher credit reserves compared to the previous quarter. He cited the challenging economic environment as the primary reason for this increase. While the exact figure wasn’t specified, Raghavan indicated it would be in the hundreds of millions of dollars.
Positive Outlook on Loan Quality
Despite this increase in reserves, Raghavan expressed confidence in the overall quality of Citigroup’s loan portfolio. He highlighted that a large portion (80%) of their corporate lending is to highly creditworthy entities. He emphasized that while the situation is still developing, he remains optimistic about the quality of their loans.
Investment Banking Challenges
However, Raghavan acknowledged that the current economic uncertainty has negatively impacted Citigroup’s investment banking division. The lack of clear economic signals is hindering market activity, making it difficult for the investment banking sector to thrive.