Citigroup Q4 profits rise 15%, helped by trading
Wells Fargo Q4 profit slides
NEW YORK, Jan 14, (AP): Citigroup’s fourth-quarter profits rose by 15%, as the banking conglomerate benefited from a boost in trading similar to competitor JPMorgan Chase.
The New York-based bank said Tuesday that it earned a profit of $4.98 billion, or $2.15 per share, compared with a profit of $4.3 billion, or $1.65 per share, in the same period a year earlier. The results topped analysts’ expectations for a profit of $1.81 a share, according to FactSet.
Like JPMorgan Chase, which also reported its results on Tuesday, Citi saw a boost in profits from its trading operations. Bond trading revenues rose 49% from a year earlier, when a steep downfall in the markets in the fourth quarter took its toll on all banks’ trading desks.
In Citi’s consumer group, profits rose 12% from a year earlier, helped by the bank’s large credit card division where more consumers borrowed and spent during the holiday season.
The bank’s return on common equity, a measurement on how well a bank performs with the assets it holds, was 10.6% in the quarter. Banks the size of Citi typically aim to have that figure above 10%.
For the full year, Citi had a profit of $19.4 billion, up from $18.05 billion in 2018. Revenue at the bank was $74.29 billion compared with $72.85 billion a year before.
Meanwhile, Wells Fargo’s net income tumbled in the fourth quarter, weighed down by hefty costs and a lower interest rate environment.
The San Francisco-based bank earned $2.87 billion, or 60 cents per share, for the period ended Dec 31. A year earlier it earned $6.06 billion, or $1.21 per share. The current quarter’s results included 33 cents per share of litigation accruals.
Analysts polled by FactSet predicted a profit of $1.12 per share.
Wells is still under growth restrictions by regulators after years of missteps, beginning in 2016 with the uncovering of millions of fake checking accounts its employees opened to meet sales quotas. In 2018 the Federal Reserve capped the size of Wells Fargo’s assets. The Fed hasn’t said when it will lift the restrictions on the bank.
Last year Wells Fargo & Co named its third CEO in as many years as it attempted to move on from its scandals. Charles Scharf, CEO of the Bank of New York Mellon, took over for C. Allen Parker, who had led the company since March.
“Wells Fargo is a wonderful and important franchise that has made some serious mistakes, and my mandate is to make the fundamental changes necessary to regain the full trust and respect of all stakeholders,” Scharf said in a statement on Tuesday.
Net interest income declined from the third quarter to $11.2 billion, mostly hurt by lower interest rates.
The biggest US mortgage lender’s revenue dropped 8% to $19.9 billion. Wall Street expected $20.12 billion. Shares fell 3.5% before the market open.