Citigroup Navigates Tough Quarter with Revenue Dip, Plans Major Job Cuts

Citigroup Inc C reported a fourth-quarter FY23 revenue decline of 3% year-over-year to $17.44 billion, missing the consensus of $18.74 billion. Adjusted EPS of $0.84 beat the consensus of $0.81.

GAAP EPS loss was $(1.16), excluding the divestiture-related impacts. 

Net credit losses for the fourth quarter were $1.99 billion, up 69% year-over-year. 

Services revenue grew 6% Y/Y to $4.5 billion, mainly driven by higher net interest income across Treasury and Trade Solutions (TTS) and Security Services.

Markets revenue declined by 19% Y/Y to $3.4 billion, driven by a decline in Fixed Income.

Banking revenue increased 22% Y/Y to $949 million, driven by Investment Banking fees.

U.S. Personal Banking revenue grew 12% Y/Y to $4.9 billion, driven by higher net interest income.

Wealth revenue declined 3% Y/Y to $1.7 billion due to lower deposit spreads. All other revenue declined 17% Y/Y to $2 billion. 

Net loss for the quarter was $(1.84) billion. Operating expenses stood at $16 billion, an increase of 23% Y/Y.

Total allowance for credit losses on loans was $18.1 billion, with a reserve-to-funded loans ratio of 2.66%, compared to $17.0 billion, or 2.60% of funded loans in 4Q22.

Citigroup’s end-of-period loans were $689 billion at the quarter’s end, up 5% Y/Y, mainly reflecting growth in U.S. Personal Banking. 

Deposits were ~$1.3 trillion at quarter end, down 4% from the prior year, primarily due to a reduction in Services, reflecting quantitative tightening.

Citigroup’s book value per share is $98.71 (+5% Y/Y), and tangible book value is $86.19 (+6% Y/Y) at quarter end.

Citigroup expected to cut 20,000 jobs in the “medium term” as it reported its worst quarter for 15 years, the Financial Times reports.

Outlook: Citigroup expected FY24 adjusted revenue of $80 billion – $81 billion vs. consensus $72.31 billion.

Price Action: C shares are trading higher by 2.47% at $53.37 on the last check Friday.

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