Citigroup’s Quarterly Profit Falls 26% – The Wall Street Journal

For the full year, Citi’s profit nearly doubled to $22 billion and revenue fell 5% to $71.9 billion.

Under Chief Executive

Jane Fraser,

Citigroup has been shedding many international consumer operations in an attempt to simplify its business and boost profitability. Citigroup is pulling back from consumer operations in 14 countries, including Mexico, one of its biggest foreign markets.

The work, in particular a plan to wind down operations in South Korea, pushed expenses up 18% in the quarter to $13.5 billion. That dragged down profit at the same time that revenue from its market trading operations fell. Wild markets have powered trading revenue—and banks’ profits—throughout the pandemic.

Revenue in the institutional clients group rose 4% to $9.9 billion. Trading revenue fell 17% in the quarter. Investment banking fees from advising companies on mergers, and underwriting stock and debt sales, rose 43%.

On the consumer side, revenue fell 6% to $6.9 billion and profit fell 42%, hurt by low interest rates and the restructuring expenses.

Spending on Citigroup credit cards rose 20%. But customers continued to pay off the charges, and card loans fell 1%. Customers, flush with cash in the pandemic, had been paying off their cards each month and limited borrowing, but executives have said they believe loans will grow in 2022.

Citigroup’s lending profitability slipped again, with its net interest margin ticking down to 1.98% from 1.99% last quarter.

If the Federal Reserve increases interest rates as forecast, banks should be able to increase lending profits by charging more for loans even as they keep deposit rates near zero.

The bank released another $1.3 billion from reserves it had built for potential loan losses, boosting the bottom line in the quarter. In total for the year, the bank released $8.7 billion, after setting aside $17.5 billion in 2020, a swing that powered the big profit gain for the year.

Citigroup’s return on tangible common equity, the key measuring stick for its profitability, was 7.4% in the quarter and 13.4% for the year. In March, Ms. Fraser plans to detail strategy plans aimed at closing a gap between Citi and rivals on that metric.

Shares, which had been underperforming big rivals, fell 1.3% to $66.93.

Corrections & Amplifications
Citigroup Inc. in 2021 released $8.7 billion in reserves it had built for potential loan losses, including $1.3 billion in the fourth quarter. An earlier version of this article incorrectly said the bank released almost $5 billion in 2021 and $1.4 billion in the fourth quarter. (Corrected on Jan. 14)

Write to David Benoit at david.benoit@wsj.com