Citigroup Turns To Profit In Q4, Beats View; But Revenues Miss

Citigroup Inc. (C) on Monday reported a turnaround to profit in the fourth quarter as the year-ago quarter’s results included the impact of a hefty charge related to the U.S. tax reform. The latest quarter’s results also benefited from a reduction in expenses, lower cost of credit and a lower effective tax rate that helped offset a decline in revenues.

Adjusted earnings per share beat analysts’ estimates, while revenues missed their expectations. The company noted that a volatile fourth quarter impacted some of its market-sensitive businesses, particularly Fixed Income. Citigroup’s shares are declining more than 1 percent in pre-market activity.

Citigroup’s fourth-quarter net income was $4.31 billion or $1.64 per share, compared to net loss of $18.89 billion or $7.38 per share in the year-ago period.

The latest quarter’s results included a one-time benefit of $94 million, or $0.03 per share.

The year-ago quarter’s results include a non-cash charge of $22.6 billion, or $8.66 per share, related to the enactment of the U.S. tax reform.

Excluding items, adjusted earnings were $1.61 per share, compared to $1.28 per share last year. On average, 23 analysts polled by Thomson Reuters expected earnings of $1.55 per share. Analysts’ estimates typically exclude special items.

Revenues for the quarter declined 2 percent to $17.12 billion from $17.50 billion in the prior year. Analysts expected revenue of $17.59 billion.

The decrease in revenues reflect lower revenues in Fixed Income Markets within the Institutional Clients Group or ICG, as well as the wind-down of legacy assets in Corporate / Other.

Global Consumer Banking revenues of $8.44 billion were largely unchanged from $8.45 billion last year, while Corporate/Other revenue fell 37 percent to $470 million.

Revenues from Institutional Clients Group decreased 1 percent to $8.21 billion, as a decline in Markets and Securities Services revenue more than offset growth in Banking.

Fixed income markets revenue decreased 21 percent to $1.94 billion reflecting a challenging trading environment characterized by volatile market conditions and widening credit spreads, particularly in December. However, equity markets revenue increased 18 percent, reflecting the absence of an episodic loss incurred in the prior-year period.

The company’s total operating expenses decreased 4 percent from last year to $9.89 billion.

Citigroup’s cost of credit declined 7 percent from last year to $1.93 billion, primarily driven by an episodic charge-off in ICG in the prior-year period.

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