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

Citigroup’s fourth-quarter net income fell by more than 21% from a year ago as the bank set aside more money for potential credit losses. Shares rose 1.7% as investors looked to some positives in the report, including a record fourth quarter for fixed-income trading. CEO Jane Fraser’s turnaround efforts at Citigroup have been hampered by concern over a global economic slowdown and inflationary pressures from central banks around the world. Also, like its peers, Citigroup is experiencing a sharp decline in investment banking revenue which a rise in trading results will partially offset. Citigroup’s net income slumped 21% to $2.5 billion from $3.2 billion in the previous year, largely due to slowing loan growth in its private bank and expectations for a weaker macroeconomic environment. Higher revenues and lower expenses partially offset the weakness.
According to the bank, it has set aside more money to cover credit losses moving forward. Provisions have been increased by 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. Revenues in services and markets divisions increased 32% and 18%, respectively, driven by growth in interest income and in fixed-income markets. The fixed-income markets division saw revenues jump 31% to $3.2 billion, the highest fourth-quarter results due to strength in rates and currencies. There was also strength in banking, with private bank revenues gaining 5% and U.S. personal bank revenues up 10%. Retail banking revenues, however, fell 3% due to lower mortgage volumes.