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

Citigroup said fourth-quarter net income decreased by more than 21% from a year ago as declines in investment banking overshadowed a benefit from higher interest rates. The bank also said it was setting aside more money for credit losses.

Shares rose in early trading following the report.

Here are the fourth-quarter numbers versus what Wall Street expected:

• Net income: $2.5 billion versus $3.2 billion a year ago.
• Earnings: $1.10 a share, excluding certain divestitures. (It was not clear if that was comparable to the $1.14 a share estimate from analysts.)
• Revenue: $18.01 billion in revenues, above the $17.9 billion expected from analysts polled by Refinitiv.
• Net Interest Income: $13.27 billion, above the 12.7 billion expected by analysts, according to StreetAccount
• Trading Revenue: Fixed Income $3.16 billion, above expectations. Equities trading was $789 million, below expectations.
• Provision for credit losses: $1.85 billion compared to $1.79 billion expected by analysts polled by StreetAccount.

Jane Fraser’s turnaround efforts at Citigroup have hit a snag amid concerns over a global economic slowdown and as central banks around the world battle inflation. Like the rest of the industry, Citigroup is also contending with a sharp decline in investment banking revenue, partly offset by an expected boost to trading results in the quarter.

Citigroup’s net income slumped 21% to $2.5 billion from $3.2 billion in the previous year, largely due to loan growth in its private bank alongside expectations for a weaker macroeconomic environment going forward. The weakness was partially offset by higher revenues and lower expenses.

The bank said it set aside more money for credit losses going forward, increasing provisions 35% from the previous quarter to $1.85 billion. This build included $640 million for unfunded commitments due to loan growth in the private bank.

JPMorgan, Bank of America and Wells Fargo also reported earnings on Friday. JPMorgan topped analyst estimates for the quarter and said that it now sees a mild recession as the base case for 2023. Bank of America also beat Wall Street’s expectations as higher interest rates offset losses in investment banking.

Wells Fargo shares fell, however, after the bank reported that profits fell in the latest quarter due to a recent settlement and the bank’s boosted reserves amid economic weakness.

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