Citigroup Beats Profit Expectations for Fourth Quarter -- Update
By David Benoit
Citigroup Inc. on Friday said its fourth-quarter income fell 7%
and it drew down some of the reserves it set aside to cover
potentially soured loans.
The New York bank said profit fell to $4.63 billion, or $2.08
per share, compared with $4.98 billion, or $2.15 per share, a year
earlier. Still, that beat the $1.34 expected by analysts polled by
Revenue fell 10% to $16.5 billion, falling short of the $16.72
billion analysts expected.
For all of 2020, a year of upheaval in the economy, profit at
the nation's third-biggest bank by assets fell 41% to $11.37
billion and revenue was flat at $74.3 billion. Like its big bank
peers, Citigroup enjoyed strong results from its Wall Street
operations, but that was offset by the billions of dollars the bank
had to put aside for potentially bad loans.
In a sign its outlook on the economy has improved, Citigroup
drew down $1.5 billion of the reserves the bank had put aside for
future loan losses, a big reason the bank's profit was better than
It will be the last earnings day for Chief Executive Michael
Corbat, who is retiring in February after the bank finalizes its
2020 financial statements. He will be succeeded by bank president
Jane Fraser, who has led various divisions since joining Citigroup
in 2004 and recently ran the consumer bank.
Shares of Citigroup fell 23% in 2020, underperforming the
S&P 500's 16% increase and the KBW Nasdaq Bank Index, which
fell 14%. But in the first two weeks of 2021, bank stocks have been
lifted by hopes of an economic recovery spurred by vaccines and
potentially more government stimulus. Citigroup shares are up 12%
in the new year.
For the quarter, profit in the institutional clients group,
which includes trading and investment banking, rose 27% to $3.65
billion, while revenue fell slightly to $9.28 billion.
Trading revenue rose 14%, while investment banking revenue fell
Still, those businesses had some of their best quarters in
history this year and drove the institutional group to its record
$44.3 billion in total 2020 revenue.
The consumer bank's fourth-quarter profit fell 17% to $1.3
billion, and revenue fell 14% to $7.31 billion.
Spending on Citigroup credit cards fell 7% from a year ago but
rose 12% compared with the third quarter. It was the highest level
of the year, showing a continued consumer comeback.
Citigroup said operating expenses rose 2% to $10.71 billion, a
line investors are watching closely. Regulators in the fall slapped
Citigroup with an order to rebuild its vast internal risk systems,
a project that's expected to take several years at significant
Citigroup said its return on tangible common equity, a closely
watched measure of its profitability that judges how efficient it
is, jumped to 11.4% in the fourth quarter from 7.6% in the third
quarter. That's higher than analysts expected it to get in any
quarter over the next two years.
Write to David Benoit at email@example.com
(END) Dow Jones Newswires
January 15, 2021 09:24 ET (14:24 GMT)
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