Citigroup Inc. (C: Quote) on Thursday reported a 25 percent increase in profit for the fourth quarter from last year, reflecting higher trading revenues and lower net credit losses. However, the bank’s results were weighed down by repositioning charges and hefty legal expenses.
Citigroup said in December that it will cut over 11,000 jobs or about 4 percent of its workforce, to achieve savings of more than $1.1 billion starting from 2014. This was the first major move under Citi’s new Chief Executive Officer Michael Corbat, who took over the reins of the bank from Vikram Pandit in October.
Commenting on the results, Corbat said, “Our bottom line earnings reflect an environment that remains challenging – with businesses working through issues like spread compression and regulatory changes – as well as the costs of putting legacy issues behind us. However, we did make progress on several fronts.”
Citigroup’s fourth-quarter net income rose to $1.20 billion or $0.38 per share from $956 million or $0.31 per share in the prior-year period.
The latest quarter’s results included credit/debit valuation adjustment of negative $485 million and repositioning charges of $653 million or $0.21 per share after-tax. The results also include $1.3 billion of legal and related expenses.
Excluding these items, adjusted net income was $2.15 billion or $0.69 per share, compared to $1.25 billion or $0.41 per share in the same period last year. On average, 22 analysts polled by Thomson Reuters expected the company to earn $0.96 per share. Analysts’ estimates typically exclude special items.
Total revenues increased 6 percent to $18.17 billion from $17.17 billion in the year-ago period. Excluding credit adjustments, revenue rose 8 percent from last year to $18.66 billion. Analysts had a consensus revenue estimate of $18.82 billion.
Net credit losses declined 25 percent from last year to $3.07 billion.
Revenues at Citi Holdings declined 3 percent to $1.06 billion, reflecting a decline in local consumer lending revenues due to the ongoing reduction in assets. The segment’s net loss was $1.06 billion, narrower than loss of $1.32 billion last year.
Citi Holdings assets at quarter-end of $156 billion declined 31 percent from last year and represented 8 percent of total Citigroup assets.
Citicorp revenues rose 6 percent from the year-ago period to $17.12 billion. However, the segment’s net income decreased 1 percent to $2.25 billion, as revenue growth and lower net credit losses were offset by the impact of credit adjustments.
Within the segment, Global Consumer Banking revenues rose 4 percent, while Transaction Services revenues edged up 1 percent.
Securities and Banking revenues grew 34 percent, while investment banking revenues surged 56 percent. Equity markets revenue jumped 95 percent and revenue from fixed income markets surged 58 percent.
Citigroup’s total allowance for loan losses declined 15 percent from last year to $25.5 billion.
For fiscal year 2012, Citigroup’s net income declined to $7.54 billion or $2.44 per share from $11.07 billion or $3.63 per share in the prior year. However, adjusted net income increased to $11.92 billion or $3.86 per share from $10.09 billion or $3.30 per share last year.
Revenues for the year were $70.17 billion, down 10 percent from $78.35 billion in the previous year. Excluding credit adjustments and the impact of minority investments, revenues increased 1 percent to $77.13 billion.
Analysts expected the company to earn $3.97 per share for the year on revenues of $72.15 billion.
In Thursday’s regular session, C is trading at $41.17, down $1.31 or 3.08 percent on a volume of 7.03 million shares.
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by RTT Staff Writer
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