Citigroup swings to US$1.8bil loss on slew of charges

Citigroup on Friday reported a $1.8 billion loss for the fourth quarter as it recorded charges to refill a government deposit insurance fund and carry out a sweeping internal reorganization.

CEO Jane Fraser called the results “very disappointing,” but expects this year to be a turning point.

“We made substantial progress simplifying Citi and executing our strategy in 2023,” she said in a statement.

Fraser has rolled out a multi-year effort to cut bureaucracy, increase profits and boost a stock that has lagged peers.

The loss was also fueled by the bank stockpiling money to cover currency risks in Argentina and Russia.

Revenue slid to $17.4 billion in the quarter from a year earlier.

It was the first time Citigroup broke out earnings for its five businesses — services, markets, banking, U.S. personal banking and wealth, which were previously housed under broader divisions.

Revenue from markets, or the trading division, dropped 19% to $3.4 billion from a year earlier. It was dragged lower by a 25% plunge in fixed income revenue, which included some losses from Argentina.

In contrast, banking revenue climbed 22% to $949 million, led by higher investment banking fees that offset a slide in corporate lending.

In U.S. personal banking, revenue climbed 12% to $4.9 billion, lifted by retail banking and credit cards.

Services revenue grew 6% to $4.5 billion and wealth management revenues fell 3% to $1.7 billion.

Citi’s 2023 revenue rose to $78.5 billion from a year earlier. Still, its net income fell to $9.2 billion, compared with a year earlier.

Chief Financial Officer Mark Mason said last month that Citi expects to complete its overhaul in the first quarter of 2024. The lender aims to reduce annual expenses to a range of $51 billion to $53 billion.

In November, Citi announced fresh leadership changes after saying it will reduce management layers to eight from 13.

Under the new structure, the leaders of Citi’s five major businesses will report directly to the CEO. It will also cut regional leadership role outside North America.

The lender’s stock climbed 13.7% in 2023, compared with a/an xx% rise in the S&P 500 Banks Index, which tracks major bank stocks. Still, Citi’s shares underperformed the benchmark S&P 500, which gained about 24.2%.

Rivals JPMorgan Chase and Bank of America on Friday reported lower quarterly profits, while Wells Fargo outperformed on cost cuts. – Reuters