8/3/2019 Citigroup Profit Falls on Choppy Capital Markets

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Citigroup profit falls on choppy capital

markets

NEW YORK Citigroup Inc.s fourth-quarter profit fell 11% from a yearearlier as choppy capital markets overshadowed the banks continued

recovery from the financial crisis.

The global bank made more loans around the world--even in the U.S.--and itscapital continues to improve, but a particularly weak fourth-quarter bond market

turned dismal in December, hitting Citi at a sensitive spot.

Citi reported fourth-quarter earnings of $1.17 billion as revenue fell 7% to $17.17

billion. Citi shares, down 40% over the past 12 months, fell 2.8% in recent

premarket activity to $29.89 as results fell well short of analyst expectations.

Overall, we made solid progress in 2011, Chief Executive Vikram Pandit said ina press release. But clearly, the macro environment has impacted the capital

markets, and we will continue to right-size our businesses to match the

environment.

The bank blamed a continued weak economic recovery in developed countries, and

skittish investors scared by the European debt crisis, but a slew of one-time

charges also hurt results.

Citi took a $40 million charge tied to the valuation of its own debt and added $557

million to its reserve for litigation. The bank previously announced a $300 million

charge because of its Japan operations and a $400 million hit from 4,500 job cuts.

An aggressive push abroad has been a boon for Citi, and its strong consumeroperation overseas continued to help; however, rocky capital markets left most of

Wall Street struggling to improve.

Citis fourth-quarter results underline Citis struggle to offset trading, underwritingand advisory results with an upswing in lending. Overall loans rose 14%;

international consumer loans rose 6%, excluding the impact of the weak dollar.

Citi reported earnings of 38 cents a share, down from 43 cents a share a yearearlier. Analysts polled by Thomson Reuters expected a per-share profit of 48

cents on $18.57 billion in revenue.

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Similar to its fellow banks, Citi has benefited lately from reducing funds set aside

to cover bad loans. Total credit costs in the fourth quarter came in at $4.1 billion,down from $4.84 billion a year earlier and $3.35 billion in the third quarter. Citi

reduced its reserve for bad loans by $1.5 billion.

Our company has now been profitable for two full years, Pandit told employees

in a memorandum Tuesday. Weve shown that we can weather a tough

environment without investors, regulators and other observers questioning our

safety and soundness.

Citicorp, the banks core retail banking and commercial and investment-banking

business, saw profit decline 15% from a year ago, to $2.1 billion as revenue fell

2%, to $14.01 billion.

Revenue rose in retail banking in Latin America and Asia, but fell in NorthAmerica and Europe. Capital-markets revenue rose in the region Citi reports asEurope, Middle East and Africa, but fell sharply at all other parts of the world.

Equity underwriting and trading, Citis main weak spot, did badly, while revenue

from debt underwriting improved 10% from a year earlier but fell from the third

quarter. Advisory revenue fell from a year earlier and the third quarter.

Profit improved mainly in North Americas retail banking as losses from bad loans

declined.

Citi Holdings, which includes assets the company is seeking to unload, posted awider loss as the capital-markets slump hit the retail-brokerage business. The unit

has reduced its assets by more than half since its creation in 2009.