Citigroup, in the midst of a pullback from consumer banking in a number of international markets, eked out a slim fourth-quarter (Q4) profit after taking charges of $3.5 billion to settle legal claims and overhaul operations. The charges matched the figure foreshadowed by chief executive Mike Corbat in December, but the earnings fell short of market expectations and the bank's shares fell 3 per cent.
Adjusted net income fell to $346 million from $2.60 billion a year earlier.Adjusted revenue fell 0.8 per cent. Citi is the most international of the big US banks, with about half of its business coming from abroad.
With fixed-income markets remaining tough, Citi’s forecast of a 5 per cent decline in markets revenue in the quarter turned into a 16 per cent drop.
JPMorgan Chase and Bank of America Corp have also reported declines in fixed-income revenue. Bank Of America said Q4 profit fell 11 per cent as revenue from fixed-income trading declined. Net income slipped to $3.05 billion from $3.44 billion a year earlier.
JPMorgan said its earnings fell 7 per cent, to $4.9 billion, from $5.6 billion a year earlier. Net revenue dropped 3 per cent, to $22.5 billion, from the fourth quarter of 2013. Consumer banking revenue rose 3 per cent on a constant-dollar basis, reflecting strength in Citi’s North American business as well as one-time gains from the sale mortgage loans.
Citi has taken nearly $3.4 billion in repositioning charges since Mr Corbat became chief executive in October 2012, including costs for shutting down or selling retail businesses in 16 countries. Adjusted operating expenses increased 21 per cent.
The bank's most recent legal woes stem from government investigations into alleged manipulation of currency markets and Libor interest rates, as well as lax compliance with money-laundering rules. The company still faces other possible actions by the US department of justice and Federal Reserve. – (Reuters, New York Times service)
