Citigroup asset management income slips 16%
GLOBAL – Citigroup’s asset management net income, which includes Retirement Services, fell 16% to 69 million dollars in the second quarter, from 82 million dollars a year before.
It said: “Income for asset management, which includes Retirement Services, was 69 million dollars, a decline of 16% versus the second quarter of 2003.”
Excluding retirement services, the unit had income growth of 12%, to 73 million dollars. It said this was “driven by positive market action and cumulative net flows, partially offset by higher legal expenses and employee compensation costs and the contract termination to manage assets for insurer St. Paul Travelers”.
Retirement services posted a net loss of four million dollars. This was primarily due to a 25 million-dollar increase in reserves for net claims and operating losses in Argentina. And there was an absence of current year tax benefits on the increase in reserves.
It said assets under management were “essentially flat” compared to the prior year period at 491 billion dollars. Higher markets and retail and institutional inflows of 14 billion dollars were offset by the termination of the 36 billion-dollar St. Paul Travelers contract.
Transaction services income was up 45% at 261 million dollars while assets under custody rose 25% to seven trillion dollars.
Overall, Citigroup reported net income for the period of 1.14 billion dollars.
"Second quarter results were significantly reduced by the WorldCom settlement and associated reserve increase, partially offset by the gain on sale of our Samba interest,” said chief executive Charles Prince.
“Excluding the effect of these items, underlying business dynamics were strong, with revenues increasing by 9%, despite sluggish capital markets in May and June.”