Citigroup Posts Big Loss on New Tax Law -- Earnings Review
January 16 2018 - 9:52AM
Dow Jones News
By Austen Hufford and Christina Rexrode
Citigroup Inc.'s (C) fourth-quarter profit was erased by a giant
one-time charge related to the new tax law.
Here's what you need to know.
EARNINGS: Citigroup posted a loss of $18.3 billion, or $7.15 a
share, its largest ever quarterly deficit, with the $22 billion
charge also leading to a loss for the year. The company said the
tax law would lead to higher profit and increased returns in the
future. The tax charge comes largely from write-downs of the bank's
deferred-tax assets.
Without the charge, the bank earned $1.28 a share for the
quarter, above the $1.19 expected by analysts as polled by Thomson
Reuters.
SHARES RISE: Shares of Citigroup rose 2.6% in premarket trading
to $78.80.
LOANS INCREASE: Total loans for the bank grew 7% to $667 billion
from a year prior. Citigroup increase its allowance for bad loans
to $12.4 billion from $12.1 billion previously, though the
closely-watched metric fell as a percentage of total loans. Loans
that the bank considers to have doubtful repayment potential, also
known as non-accrual loans, declined 17% to $4.8 billion, with
consumer non-accrual loans declining 15% and corporate non-accrual
loans declining 20%.
REVENUE RISES: Revenue at the bank rose 1% to $17.26 billion,
above the $17.22 billion that analysts were expecting.
LESS TUMULT AND LESS TRADING: Trading revenue fell 19% to $2.9
billion from $3.6 billion a year ago, hurt by declines in both
fixed-income and equities trading. Political surprises in late
2016, most notably, the election of Donald Trump, stirred up
volatility and made for trading booms. The bank also said its
equity trading division was hurt by $130 million related to a
"single client event." JPMorgan Chase & Co. (JPM) on Friday
disclosed a loss of $143 million on a "margin loan to a single
client" in its results, which was linked to troubles at Steinhoff
International Holdings NV (SNH.JO), a South African company facing
an accounting scandal.
CREDIT-CARD BILL: Citigroup has been investing heavily in its
credit-card unit, including with new rewards programs and
marketing. The bank is facing questions from investors who want to
know when that will start paying off. Revenue from
Citigroup-branded cards in North America increased 1% over the year
to $2.2 billion even as the company said it saw higher related
costs.
Write to Austen Hufford at austen.hufford@wsj.com and Christina
Rexrode at christina.rexrode@wsj.com
(END) Dow Jones Newswires
January 16, 2018 09:37 ET (14:37 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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