Citibank Korea Inc. (CKI, CEO YK Ha, www.citibank.co.kr) today reported second quarter 2011 net income of KRW 144.1 billion, 1.5% higher than the first quarter 2011 and 8.6% lower than the second quarter 2010. Return on assets (ROA) and return on equity (ROE) were 0.37% and 3.96% (as calculated following FSS guidance) respectively. CKI's Basel II Capital Adequacy Ratio and Tier 1 Capital Ratio at June 30 2011 were estimated over 16.86% and 13.91%, respectively.
CKI's revenues in the second quarter 2011 were KRW 456.0 billion, up 13.7% from the previous quarter and up 8.0% year on year due to higher interest revenues offset by lower non-interest revenues.
Interest revenue growth was driven mainly by a net interest margin improvement of 10 bps over the prior quarter and 28bps year on year. Non-interest revenues were down 31.1% compared to the prior quarter due to lower earnings in sales & trading and higher card acquisition costs. Non-interest revenues were down 43.1% year on year due to lower sales and trading revenue & higher card acquisition costs offset by higher fee income from investment and bancassurance products.
Net income for the second quarter 2011 was 1.5% higher than the prior quarter due to higher revenue, offset by higher expenses and loan loss provisions. Net income was 8.6% lower than the second quarter 2010 mainly due to higher loan loss provisions and higher expenses offset by higher revenues.
Second quarter 2011 expenses were KRW 210.5 billion, 1.1% higher than the prior quarter mainly due to the timing of certain operating items. Year on year, expenses were up 5.3% mainly due to a one-time item in the prior year. Expense management continues to be an area of strong focus, and the expense-to-revenue ratio improved to 46.2% from 51.9% in the first quarter 2011 and 47.4% in the second quarter 2010.
Loan loss provisions & other allowances increased by KRW41.7 billion compared to last quarter and by KRW 44.1 billion over the same period of last year due to higher litigation reserves and provisioning. The Non-Performing Loan (NPL) ratio was 1.45%, up 9bps from the prior quarter and 7bps better year on year while the NPL coverage ratio stood at 132.4%.
Customer loans increased 2.1% over the prior quarter and 6.4% from a year earlier due to increases in mortgage loans, trade assets and credit cards. Customer deposits were down 0.1% from the first quarter and down 1.2% from a year ago as part of a funding optimization strategy.
"We are pleased with the improved second quarter performance and strong business momentum. CKI will continue to focus on sustainable profitability by putting our client first, leveraging our global network & product capabilities, a differentiated service offering and branch network expansion", said YK Ha, CEO of CKI.
Source: Citibank Korea Inc.
