Citigroup reported a 13 per cent drop in profits for the fourth quarter, weighed down by higher expenses as the bank enters the final phase of an ambitious overhaul. The bank employs around 3,000 people in the Republic.
The Wall Street bank on Wednesday said net income fell to $2.5bn (€2.14bn) in the final three months of the year, as expenses rose to nearly $14bn. The bank’s profits also took a $1.1bn one-off hit from the sale of its Russian business. Citi’s adjusted earnings per share, which exclude the Russia sale and other items, of $1.81 topped expectations of $1.63.
Revenues in the fourth quarter rose 2 per cent year-on-year to $19.9bn, higher than analyst expectations, driven by growth in the investment bank, services, wealth and personal banking.
Shares in Citi have rallied over the past year as chief executive Jane Fraser pushes through a high-stakes overhaul of the bank, which has lagged behind its peers since the financial crisis.
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Fraser previously said she expected the changes would ultimately lead to 20,000 job cuts by the end of this year, and the plan has started to win over sceptics as the business improved profitability and traded at book value for the first time in several years.
But on Wednesday Citi said that expenses, a major area of focus for investors, were up 6 per cent in the fourth quarter to $13.8bn.
Expenses at Citi’s corporate and investment bank were up 10 per cent, driven by higher compensation and benefits. The division has embarked on a hiring spree in the past year, with former JPMorgan banker Vis Raghavan hiring several of his former colleagues once a non-solicitation agreement with his old employer expired.
The Wall Street bank, which has tasked Raghavan with revamping its corporate and investment bank, posted 78 per cent year-on-year revenue growth in its banking division, in a sign that the restructuring is starting to pay off. Citi’s investment banking fees were up 35 per cent year-on-year, thanks to growth in debt capital markets and advisory work.
Citi posted a $2.2bn provision for credit losses, below market expectations, primarily to account for net credit losses in its US card business. In a sign of relative resilience from US consumers, net credit losses fell by more than a fifth in its retail business.
Bank of America on Wednesday reported a 12 per cent rise in fourth-quarter profit to $7.5bn, as the bank was boosted by higher consumer spending.
The lender booked a $1.3bn provision for credit losses, lower than the $1.5bn it set aside in the same period last year, thanks to lower charge-offs and credit card delinquencies.
“With consumers and businesses proving resilient, as well as the regulatory environment and tax and trade policies coming into sharper focus, we expect further economic growth in the year ahead,” said chair and chief executive Brian Moynihan. “While any number of risks continue, we are bullish on the US economy in 2026.”
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