Citigroup Kicks Off Big Bank Q4 Earnings With Mixed Results

Fourth-quarter earnings season for big banks kicked off Monday morning with Citigroup Inc C's mixed results.

Earnings

Citigroup said it earned $1.61 per share in the fourth quarter on revenue of $17.1 billion, which was mixed compared to expectations of $1.55 per share on revenue of $17.59 billion.

Revenue for the fourth quarter was 2 percent lower on a year-over-year basis, mostly due to lower revenue in Fixed Income Markets with the Institutional Clients Group and the wind-down of legacy assets in Corporate/Other.

Net income for the fourth quarter improved from a net loss of $18.9 billion in the same quarter a year ago to $4.3 billion although last year's results included a one-time non-cash charge of $22.6 billion due to tax reform. Fourth quarter 2018 results also benefited from a one-time $94 million gain.

Book value

Book value per share rose 6 percent in the quarter to $75.05 while tangible book value per share also rose 6 percent to $63.79 due to the benefit of a lower share count. The bank's CET1 Capital ratio rose from 11.7 percent in the prior quarter to 11.9 percent.

During the quarter the company oversaw the repurchase of 74 million shares of its own stock and returned $5.8 billion to shareholders through dividends and repurchases.

Net income for the full fiscal year improved from a loss of $6.8 billion on revenue of $72.4 billion in 2017 to $18.0 billion on revenue of $72.9 billion. Excluding last year's one-time impact due to tax reform net income would have been 14 percent higher.

Why It's Important

Citigroup CEO Michael Corbat said in the earnings release the company achieved "solid progress" throughout the year in reaching its longer-term financial targets of ending the year with an RoTCE (Return on Average Tangible Common Shareholders' Equity) of 10.9 percent and an efficiency ratio of 57 percent.

The company did see some volatility in the fourth quarter that impacted its "market sensitive businesses," especially fixed income, but other segments continued to perform strong in the quarter.

Looking forward to 2019, the bank remains committed to achieving a 12 percent RoTCE and continue to improve its operating efficiency.

Shares fell about 2 percent Monday morning.

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