The multinational investment bank Citigroup released its fourth-quarter reports Friday, beating analyst’s expectations for profit while revenue fell below estimates. Profit dropped by 7% to $4.63 billion or $2.08 per share while analysts surveyed by Refinitiv expected it to be $1.34 per share. Revenue didn’t do so well, falling 10% to $16.5 billion as compared to estimates of $16.7 billion.
Revenues dropped mainly because of weak fixed income sales and trading – a usually strong area for Citi. The section reported an income of $3.09 billion, below the estimate of $3.2 billion. On the bright side, equity sales and trading and investment banking revenues were above expectations.
The third-biggest US bank by assets experienced a fall of 14% in the consumer-banking unit which was partially counterbalanced by a 13% growth in the trading division.
The bank’s allowance for credit losses on loans almost doubled from the previous year, standing at $25 billion at the quarter-end, representing 3.73% of total loans. The increase was expected thanks to the economic downturn fueled by the pandemic.
Citigroup released around $1.5 billion in reserves for credit losses, well-above what analysts expected. For the third quarter and the previous year, the reserves built were $436 million and $253 million, respectively. Consequently, credit costs in the quarter were over $2 billion less than the previous year.
Investors Await Jane Fraser’s Address
Citigroup’s historical move of appointing Jane Fraser as CEO made it the first big Wall Street bank to be headed by a woman. Fraser was a former McKinsey partner and headed Citi’s Latin American operations before she took on as president in 2019. Before she takes her place after Corbat, Fraser is expected to address investors and analysts on Friday for the first time. Shareholders and investors will be keeping an eye on the address to learn how Fraser is planning to add value to shareholders’ returns at the company.
Compared to its rivals like JPMorganChase, Citigroup’s performance was relatively poor and has caused frustration for investors. Last year, the bank mistakenly sent around $900 million to lenders of Revlon due to which it is now required by regulators to improve its internal risk controls.
Shares of Citigroup are down by 4% to $66.10 Friday.