Citigroup Slips as Expenses Surge, Consumer Banking Revenue Falls

© Reuters.

By Dhirendra Tripathi

AiVIF.com – Citigroup stock (NYSE:C) fell 2.2% on Friday as higher expenses and weakness at its consumer banking unit pushed fourth-quarter profit to fall short of estimates while revenue just about beat expectations.

Chief Executive Officer Jane Fraser took over the reins of the Wall Street bank in March and has since embarked on a strategy refresh that will eventually see the lender exit consumer banking operations in as many as 13 countries, mostly in Asia. It has so far sewn up deals with buyers for that business in seven countries.

As per the latest announcement, not part of the previous plan, the bank said it will exit consumer, small business and middle market banking in Mexico.

Total revenue increased 1% from a year earlier to $17 billion. On the other hand, expenses soared 18% to top $13 billion owing to charges related to the withdrawals and the bank's higher investments in technology and efforts to improve its control systems.

Net income of $3.2 billion decreased 26% from the prior-year period, reflecting higher expenses, partially offset by higher revenue and a lower cost of credit. Results for the quarter included a pre-tax impact of approximately $1.1 billion (after taxes) related to those divestitures, the bank said.

Including the impact of costs stemming from Asia divestitures, the bank’s earnings per share were 24% lower at $1.46. Excluding that, EPS rose 4% to $1.99, reflecting the reduction in share count because of buybacks.

The bank's global consumer banking revenue dropped 6% to $7 billion, hurt by a 3% drop in revenue from Citi credit cards in North America as more customers opted to pay their outstanding balances.

Investment banking stood out as revenue from the operations, riding on heightened capital market activity, soared 43% to $1.8 billion. More customers sought the bank’s advice on IPOs and M&As.

Markets revenue fell 11% to $4 billion after a record 2021 for equities. Fixed income markets revenue fell 20%, pulled down by rising government bond yields and volatility in credit and currency markets.