On Friday, January 12, Citigroup reported a loss of $1.8 billion for the fourth quarter of last year.
Between October and December 2023, the mentioned financial institution faced booking several large charges, which were related to overseas risks, a crisis in the sector of regional lenders, and an internal reorganization initiated by CEO Jane Fraser.
The bank’s charges in the last quarter were large-scale. This circumstance was an obvious factor of negative impact on the performance of the financial institution, which is why even before the publication of the results of work from October to December, Citigroup warned about the impact of the corresponding realities.
The bank’s data indicates that due to excessive сharges, its quarterly profit decreased by $4.66 billion, or $2 per share. Without taking into account the impact of this factor, the profit of the financial institution would have amounted to 84 cents per share.
Jane Fraser described the lender’s performance over the past quarter as disappointing, noting in this case charges that caused the negative indicators. At the same time, she paid attention that in 2023, the bank was able to make significant progress in simplifying the procedural specifics of its work.
In September last year, Jane Fraser announced her intention to implement plans for a large-scale corporate reorganization of the financial institution. She noted that previous efforts to improve the lender’s performance had not been successful. Also in this context, Jane Fraser drew attention to ineffective attempts to increase the share price of a financial institution.
As part of the new business strategy, it was decided that the lender would refuse to conduct operations on trading municipal bonds and distressed debt. Appropriate measures are part of the optimization plan. At the same time, these decisions did not help the bank to reduce costs, which for the period from October to December turned out to be higher than the preliminary expectations for the dynamic of the corresponding indicator.
Citigroup’s revenue for the fourth quarter was recorded at $17.44 billion. This indicator is 3% lower than the result for the same period last year.
Octavio Marenzi, CEO of the consulting firm Opimas LLC, says that the revenues of the financial institution looked awful with a big loss of $1.8 billion, but the main business of the lender at the same time demonstrated sustainability.
The price of Citigroup shares rose by 2% in the premarket on Friday.
Mark Mason, Citigroup’s chief financial officer, said the early release of the bank’s performance indicators for the fourth quarter of 2023 was the right decision in the context of the organization’s commitment to building trust and transparency.
Last year, the financial institution recorded a charge for about $1.7 billion to replenish the Federal Deposit Insurance Corp fund, which was significantly drained amid the spring collapse of Silicon Valley Bank and Signature Bank.
The lender has also accumulated reserves for $1.3 billion to cover risks outside the United States. Moreover, the financial institution has booked $780 million in charges for the implementation of the restructuring strategy. In this case, it means, among other things, severance payments to employees.
The bank has formed a special reserve for $720 million to cover risks in Argentina. The financial institution noted that this country’s ability to service its external debt in the foreseeable future may be affected by such factors as current economic trends, devaluation of the national currency, and negative geopolitical circumstances. The bank recorded about $880 million in lost profits for Argentina amid the depreciation of the peso last quarter. The Government of this country, under the leadership of the new President Javier Milei, has developed a radical plan to stabilize the economy, which is facing a severe crisis.
As we have reported earlier, Citigroup Invests in Colombian FinTech Supra.