Citigroup’s fourth-quarter profit falls 21% as bank sets aside more money for credit losses


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Citi group said fourth-quarter net profit fell more than 21% from a year ago as the bank set aside more money for potential credit losses.

Shares rose 1.7% as investors looked at some positives in the report, including a fourth-quarter record for fixed income trading.

Here are the fourth quarter numbers compared to what Wall Street expected:

  • Net Income: $2.5 billion versus $3.2 billion a year ago.
  • Earnings: $1.10 per share, excluding certain divestments. (It wasn’t clear if that compared to analysts’ estimate of $1.14 per share.)
  • Revenue: $18.01 billion in revenue, exceeding the $17.9 billion expected by analysts polled by Refinitiv.
  • Net interest income: $13.27 billion, more than the 12.7 billion expected by analysts, according to StreetAccount
  • Trading Income: Fixed Income $3.16 billion, above expectations. Share trade was $789 million, below expectations.
  • Loan loss provision: $1.85 billion compared to $1.79 billion expected by analysts polled by StreetAccount.

Citigroup CEO Jane Fraser’s efforts to turn things around hit a snag amid concerns about a global economic slowdown and as central banks around the world battle inflation. Like the rest of the industry, Citigroup is also experiencing a sharp decline in investment banking revenues, partially offset by an expected increase in trading results in the quarter.

Citigroup’s net profit fell 21% to $2.5 billion from $3.2 billion a year ago, largely due to slowing private bank loan growth alongside expectations for a weaker macroeconomic environment. environment in the future. The weakness was partially offset by higher revenues and lower costs.

The bank said it has set aside more money for future loan losses, increasing provisions by 35% from the previous quarter to $1.85 billion. This build included $640 million for unfunded commitments due to loan growth at the private bank.

Revenues in the Services and Markets divisions were up 32% and 18% respectively, driven by growth in interest income and fixed income markets. The Fixed Income Markets division saw revenues increase 31% to $3.2 billion, the highest fourth quarter results ever, due to strong currency and exchange rates.

“With a 32% increase in revenue, Services delivered another excellent quarter and we acquired significant stakes in both Treasury and Trade Solutions and Securities Services,” Fraser said in a press release. “Markets had their best fourth quarter in recent history, driven by a 31% increase in Fixed Income, while Banking and Wealth Management were impacted by the same market conditions they faced all year.”

There was also strength in banking, with private bank revenues up 5% and US personal bank revenues up 10%. However, retail banking revenues declined by 3% due to lower mortgage volumes.

JPMorgan, Bank of America and Wells Fargo also reported profits on Friday. JPMorgan topped analysts’ estimates for the quarter, saying it now sees a mild recession as the base case for 2023. Bank of America also beat Wall Street’s expectations as higher interest rates offset losses in investment banking.

Wells Fargo shares rose despite the bank’s reporting that earnings fell in the last quarter due to a recent settlement and the bank’s strengthened reserves amid economic weakness.

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