Citigroup Inc reported a 7% decline in fourth-quarter profit on Friday, beating market expectations but failing to draw Wall Street approval, as higher costs and a fall in revenue across its consumer business weighed on the results. Like fellow U.S. major JPMorgan Chase & Co, the results benefited from the release of some $1.5 billion of the reserves it had previously put aside against coronavirus-driven bad loans.
But the rock-bottom official interest rates meant to prop up the economy weighed on its big businesses providing credit cards and loans to U.S. households. Shares in the bank, which have been trading at a 10-month high, fell 1.6% in premarket trading.
Citi, who has named Jane Fraser as Wall Street’s first female chief executive to take over in next month, had added more than $10 billion to its reserves last year in expectations of more loan defaults.
The prospect of increased stimulus under a Joe Biden presidency has boosted confidence that banks will be able to ride out the COVID-19 pandemic without widespread losses.
Outgoing Chief Executive Officer Michael Corbat said the bank also intended to resume share buybacks in the first quarter on 2021, after receiving approval to do so from the Federal Reserve in December.
Citi had earlier this week reshuffled the leadership in its U.S. consumer bank and combined its wealth management units. Fraser has said that overhauling risk management and internal controls will be her priority.
Overall, the New York-based bank reported profit of $4.63 billion, or $2.08 a share, down from $5 billion, or $2.15 a share, a year earlier. Analysts on average had expected profit of $1.34 per share, according to Refinitiv data.
Total loans fell 3% to $676 billion at the end of the quarter, while deposits rose 20% to $1.3 trillion as customers, faced with economic uncertainties, borrowed less and saved more.
Citi’s revenue fell 10%, mainly due to a decline in its global consumer banking business. Fees in the North American branded cards business, once the growth engine of the consumer bank, tumbled 13% on lower purchase sales and higher payments.
Trading remained a bright spot against the backdrop of increasing concerns that the breakneck growth in trading revenue seen throughout 2020 was unsustainable.
Equities fees jumped 57% from last year and fixed income fees grew 7%.
Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor
Read all the Latest News, Breaking News and Coronavirus News here
Comments
0 comment