Corbat's Citigroup Misses
- Citigroup reports fourth-quarter profit of $1.2 billion or 38 cents a share.
- Excluding CVA/DVA and repositioning charges, Citi posted an EPS of 69 cents. Analysts expected 96 cents per share, according to consensus estimates available at Thomson Reuters
- Net revenue came in at $ 18.2 billion or $18.7 billion excluding CVA/DVA, against estimates of $18.81 billion.
- Bank reported profit of $ 7.5 billion in 2012, on revenues of $70.2 billion.
- Newly appointed-CEO Mike Corbat sayes operating environment remains challenging.
NEW YORK (TheStreet) -- Citigroup(C) missed expectations significantly in the fourth quarter, as higher-than-expected legal expenses and lower reserve releases hurt profit.
The third largest U.S. bank reported fourth-quarter profit of $1.2 billion on sales of $18.2 billion.
The results include a previously announced $1 billion restructuring charge and accounting losses from the changing value of Citigroup bonds(CVA/DVA loss) of $485 million.
Excluding items, Citi posted an operating profit of $2.2 billion or 69 cents per share, up 68% over the previous year, with adjusted revenues coming in at $18.7 billion. Analysts, however, expected an adjusted earnings per share of 96 cents and revenues of $18.81 billion.
This is the first earnings report under the new CEO Michael Corbat, who has, so far, impressed analysts with a major restructuring program and management overhaul.
"Our bottom line earnings reflect an environment that remains challenging- with businesses working through issues like spread compression and regulatory changes- as well as the costs of putting legacy issues behind us," Corbat said in a statement. "It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward."
Citi's shares were falling 2% at the open.
The miss seems to have been largely driven by an unexpected rise in legal expenses to $1.3 billion. The bank took a $305 million charge related to the foreclosure settlement with the Federal Reserve announced recently.
Citi has been recording a quarterly rate of about half a billion worth of legal expenses.