Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Citigroup results show restructuring has its costs

Stock MarketsJan 14, 2022 04:20PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: The logo of Citi bank is pictured at an exhibition hall in Bangkok, Thailand, May 12, 2016. REUTERS/Athit Perawongmetha

By David Henry and Niket Nishant

(Reuters) -Citigroup Inc displayed some of the financial bruises required for its current restructuring as it reported a 26% drop in fourth-quarter profit on Friday.

The bank said results were depressed by $1.1 billion in after-tax expenses for its ongoing divestitures of consumer banking businesses outside of the United States.

The lender has been shedding the last of its non-U.S. consumer businesses as part of a "strategy refresh" started by Chief Executive Officer Jane Fraser, who took the helm in March.

Operating expenses were up 18% from a year earlier with the charges but still up 8% for its ongoing businesses.

It has also spent more in the past few quarters to fix issues regulators identified in its controls systems, leading to questions from investors on how much money and time the remedies will require.

The bank said this week it would wind down its massive consumer bank in Mexico and earlier on Friday announced the sale of its retail arms in Indonesia, Malaysia, Thailand and Vietnam to Singapore-based lender United Overseas Bank (OTC:UOVEY).

Fraser said the decision on the Mexico business is the last big move to come from the new strategy which will focus more tightly on Citigroup (NYSE:C)'s institutional businesses.

She said the Mexico business is "a jewel," but for someone else. [L1N2TU28H]

"Our vision for Citi is to be the pre-eminent bank for institutions with cross-border needs," Fraser told analysts, adding that it also aims to be a "global leader in wealth, a major player in consumer payments and lending in the home market."

"It's simplified, more focused," she said.

Citigroup's costs have also risen due to a battle for talent on Wall Street that has prompted global banks to offer perks like higher pay and bonuses.

"We have seen some pressure in what one has to pay to attract talent," Chief Financial Officer Mark Mason said on a post-earnings call with reporters.

The higher costs pushed down the bank's profit to $3.2 billion, or $1.46 per share, in the quarter ended Dec. 31, from $4.3 billion, or $1.92 per share, a year earlier.

The profit drop had sent the company's shares down as much as 3.5% in early trading, but they pared losses after CFO Mason confirmed that company would resume share buybacks as planned.

The stock closed down 1.2% on Friday.

Citi had suspended buybacks in the fourth quarter to build capital ahead of charges for shutting down its Korean consumer business and the impact of a new rule on capital for derivatives risk.

Excluding the hit from Asia divestitures, the bank earned a profit of $1.99 per share. Analysts on average had expected a profit of $1.38 per share, according to Refinitiv IBES data.

Its global consumer banking revenue dropped 6% as holders of Citi-branded credit cards in North America paid down card balances, denying it interest income.

"Spending rates have picked up, which is good, but we have to see that materialize into average interest-earning balances which means payment rates have to normalize," Mason said.

Revenue from Treasury and Trade Solutions, generally considered Citigroup's strongest corporate business, was down 1% due to low interest rates.

The bank's overall net interest income (NII) was flat year-over-year at $10.82 billion as borrowing from corporations stayed flat. But NII from the bank's basic lending business outside of markets rose 0.6%.

Net interest margin, which measures the difference between what Citigroup pays for money and earns from loans and securities, declined to 1.98% from 2.06% a year earlier.

A bright spot during the quarter was the bank's investment banking business, which posted a 43% jump in revenue.

Total revenue increased 1% from a year earlier to $17 billion.

Wall Street peers JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo (NYSE:WFC) & Co also reported results on Friday, with their profits comfortably beating consensus estimates.

Citigroup results show restructuring has its costs

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email