Citigroup's fourth-quarter profit declines by 21% as bank sets aside more money for credit losses – CNBC

Citigroup said it had identified the cause of the flash crash and fixed the error “within minutes.”

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city ​​group Net income in the fourth quarter fell more than 21% year-on-year as banks secured more funds for potential credit losses.

Equities were flat early in trading as investors took notice of some of the positives in the report, including a record fourth quarter in bond trading.

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Here are the fourth-quarter numbers against Wall Street’s expectations:

  • Net income: $2.5 billion vs. $3.2 billion a year ago.
  • Earnings: $1.10 per share (excluding certain sales). (It wasn’t clear if this matched analyst estimates of $1.14 a share.)
  • Revenues: Revenues of $18.01 billion, beating the $17.9 billion forecast of analysts surveyed by Refinitiv.
  • Net Interest Income: StreetAccount reported $13.27 billion, beating analyst estimates of $12.7 billion.
  • Trading Income: Fixed Income was $3.16 billion, better than expected. Equities traded at $789 million, lower than expected.
  • Loan loss reserves: $1.85 billion versus analyst estimates of $1.79 billion as surveyed by StreetAccount.

Citigroup Chief Executive Jane Fraser’s turnaround efforts have hit a dead end amid fears of a global economic slowdown and as central banks around the world battle inflation. Citigroup, like others in the industry, is also grappling with a sharp decline in investment banking revenues, partly offset by higher transaction results expected in the fourth quarter. .

Citigroup’s net income decreased 21% to $2.5 billion from $3.2 billion last year. This was largely due to slowing growth in private bank lending, coupled with expectations of weakening macroeconomic conditions ahead. This weakness was partially offset by higher revenues and lower expenses.

The bank said it had set aside more funds for future credit losses, up 35% from the previous quarter to $1.85 billion. The build included his $640 million for unfunded commitments from increased private bank loans.

Services and Markets revenues increased 32% and 18%, respectively, driven by growth in interest income and fixed income markets. Fixed Income Markets revenues increased 31% to $3.2 billion, marking a record fourth quarter performance. This is due to interest rate and currency appreciation.

Fraser said in a press release: “Markets had their best fourth quarter in recent memory, driven by his 31% increase in fixed income, and the impact of the same market conditions that banks and wealth management faced throughout the year. received.”

Banking was also strong, with private bank revenues up 5% and US private bank revenues up 10%. However, retail banking revenue fell by 3% due to lower mortgage transaction volumes.

JP Morgan, Bank of America and Wells Fargo also reported results on Friday. JP Morgan beat analyst expectations for the quarter He said he expects a mild recession as a base case for 2023. Bank of America also beat Wall Street expectations Rising interest rates offset losses in investment banking.

wells fargo But stocks fell after banks reported lower earnings in recent quarters due to recent settlements and increases in bank reserves amid a weak economy.

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