Citi’s profit slumps 96% on mortgage settlement costs E-mail Tweet Facebook Google Plus Linkedin Share icons by John Kell @FortuneMagazine July 14, 2014, 7:59 AM EDT Citigroup Inc. C agreed to pay $7 billion to settle mortgage-related claims by the U.S. government and several state attorneys general, all but wiping out its profits in the second quarter. Citi said it would take a $3.8 billion pretax charge in the latest quarter to settle claims relating to residential mortgage-backed securities and collateralized debt obligations issued and underwritten by the bank between 2003 and 2008. Consequently, net profit for the quarter fell 96% from a year earlier to a meager $181 million. The news makes Citi the latest Wall St. giant to announce a multi-billion settlement with various U.S. government agencies over the quality of mortgages sold in the run up to the financial crisis. Under the terms of the settlement, Citigroup will pay $4.5 billion in cash and also provide $2.5 billion in consumer relief. The cash portion of the settlement consists of a $4 billion civil payment to the Department of Justice and $500 million in compensatory payments to the state attorneys general and the Federal Deposit Insurance Corporation. For the second quarter, Citi reported overall net income of $181 million, or 3 cents per share, down sharply from $4.18 billion, or $1.34 a share, a year ago. On an adjusted basis, which excludes the mortgage settlement, Citi’s profit slid just a penny to $1.24 a share. Revenue slid 5.6% to $19.34 billion. Analysts surveyed by Bloomberg had expected a profit of $1.05 a share on $18.81 billion. “Our businesses showed resilience in the face of an uneven economic environment,” said Chief Executive Michael Corbat in a statement. Citi’s global consumer banking revenue slid about 3% in the second quarter, while the institutional clients group’s revenue decreased 11%, hit by a weak performance in fixed-income and equity markets. Still, the bank reported higher deposits and loans from a year ago, and Corbat said the company reduced operating expenses.