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Citi mortgage originations slashed in half in second quarter

Continues to exit mortgage servicing

To no surprise, Citigroup continued to pull away from mortgages, with mortgage originations falling by more than half, as shown in its latest second quarter earnings release.

Citigroup reported in its earnings released early Friday morning that net income for the second quarter 2017 reached $3.9 billion, or $1.28 per diluted share, on revenues of $17.9 billion. This compared to net income of $4 billion, or $1.24 per diluted share, on revenues of $17.5 billion for the second quarter 2016.

The bank’s EPS of $1.28 beat by $0.07, and its revenue of $17.9 billion beat by $530 million.

Mortgage originations, however, did not perform as well. The bank’s supplemental release revealed that originations of residential first mortgages fell to $3.1 billion in the second quarter, falling 52% from $6.4 billion in the second quarter of last year.

This is also down 18% from $3.8 billion in the first quarter of this year.

Meanwhile, looking back, the bank’s first-quarter earnings report revealed a drastic shift away from its mortgage servicing rights portfolio, as continued to shed mortgage-servicing rights.

According to Citi’s first-quarter report, the bank claimed $567 million in mortgage servicing rights as assets in the first quarter. That was down a whopping 64% from the fourth quarter of 2016, when the bank claimed $1.564 billion in MSR assets.

Now in the second quarter, the bank claimed $560 million in mortgage servicing rights, which is down 58% from $1.324 billion in MSR assets for the first quarter of 2017.

Similar to JPMorgan Chase, which also reported Friday morning, lower revenues in retail banking, driven by lower mortgage revenues, partially offset North America Global Consumer Banking revenues of $4.9 billion.

Retail banking revenues declined 2% mainly due to the lower mortgage revenues. Excluding mortgage, retail banking revenues increased 7% driven by continued growth in average loans, deposits and assets under management, as well as a benefit from higher interest rates.

“During the quarter, we saw continued momentum in our businesses, with loan and revenue growth across both sides of the house,” Citi CEO Michael Corbat said.

“Our Global Consumer Bank posted revenue growth in all three regions. Our Institutional Clients Group had a very strong quarter all-around, including its best Investment Banking performance in seven years.”

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