Citigroup Inc. posted $2.32-billion of charges for layoffs and lawsuits in the first financial report under its new chief executive officer, Michael Corbat, who cautioned that the bank needs more time to deal with the problems it faces.
Even with the charges, Citi on Thursday reported a higher fourth-quarter profit as trading revenue rebounded. But the result was well below Wall Street expectations, and the company's shares fell in premarket trading.
Mr. Corbat, who took the reins in mid-October after predecessor Vikram Pandit was ousted, said in a statement that Citi's various businesses were combatting competitive and regulatory problems, as well as issues dating to the financial crisis that continue to plague the bank and its peers.
"It will take some time to work through the challenges of the current environment," he said, adding that the bank's "critical goals" include improving its return on assets.
Fourth-quarter net income was $1.2-billion, or 38 cents a share, compared with $956-million, or 31 cents a share, in same quarter of 2011.
Revenue from fixed income markets increased 58 per cent, driving Citi's Securities and Banking segment back to profitability. Companywide revenue, adjusted for certain items, increased 8 per cent, while operating expenses were unchanged.
Results were reduced by new legal costs of $1.29-billion, or 27 cents a share, and a previously announced corporate restructuring charge of $1.03-billion, or 21 cents a share.
Expenses recorded for changes in the value of some of the bank's debt and obligations of derivatives counterparties were 10 cents a share, compared with 1 cent a year earlier.
Excluding the many one-time items, Citi said it earned 69 cents per share. On that basis, analysts polled by Thomson Reuters I/B/E/S on average expected 96 cents per share.
The operating earnings were 15 cents below the lowest of the 22 estimates that comprised the consensus forecast. It is the third year in a row that the bank's fourth-quarter results have missed Wall Street forecasts by at least 20 per cent, according to Thomson Reuters data.
Citi shares fell 2.4 per cent in premarket trading following the results. Through Wednesday's close, the shares had risen 16 per cent in the three months since Mr. Corbat became CEO, against a 6-per-cent rise for the KBW banks index.