Citigroup’s revenue rises, borrowers uncertain of new loans

Citigroup breaks the record as their net income increased by 30% during the initial quarter of the year. However, the bank is facing a challenge in this slow economy as their American borrowers are skittish about getting new loans. The bank has been working hard to cut their labor and costs and this resulted in a reported gain of $3.8 billion in the first quarter.

Unfortunately, the group is still gasping as their consumer units remain stationary. Up to present, borrowers are still hesitant to take out new loans in this sluggish economy despite the significant decrease in interest rate.

John Gerspach, the bank’s chief financial officer, can see a significant amount of deleveraging in this period believing that there are no real consumers pushing the economy.

Consumers on debts and loans

A Citigroup credit card user sees this ‘deleveraging’ as a sign of relief. According to the long-time bank consumer, she reserved her entire month’s paycheck to pay off credit card debts. Although the payment terms are quite reasonable and manageable, the feeling of being stuck in loans can limit her fluidity. Banking analysts say that consumers across the country are working hard to wipe out their bills and mortgages and be debt-free as much as possible.

The future of the finance industry

Citigroup’s recently released earning report show how they may have to struggle in order to compensate for their losses, considering the new financial policies and the slow economy. Deteriorating loan demands further aggravate the issue.

Another reason why consumers are hesitant about making new loans is the wide uncertainties about the mortgages and housing industry. Housing costs keep on mounting recently. Consumers may not make any improvement on the banking units until they are stable for another stretch in credit.

On a brighter side, Citigroup continues to hope for further revenues from its international operations despite the fact that some areas also yield jaded returns. The revenues from the consumer units in Asia went down to up to $2 billion during the first quarter, a decrease of one percent from last year’s first period. Despite these struggles, the company remains to show positivity on other areas of its businesses.