Citi Shares Lower Following Court Ruling

Shares in US bank Citigroup, the country’s third-largest bank by assets, are trading down ahead of the US open on Thursday.

The company’s stock price has seen plenty of volatility over 2021 so far. Citi started the year with a 16% rally, before giving back those gains and going into the red on the year only to then recover 13% over recent weeks.

Photo by Joshua Hoehne on Unsplash

Q4 Earnings Beat

A better than expected set of Q4 earnings helped stem the declines for Citi. The bank posted earnings per share of $2.08, beating Wall Street estimates for a $1.32 EPS. Revenues were a little lower than expected at $16.5 billion versus $16.7 billion forecast.

However, the company was keen to note that revenues were roughly unchanged on their 2019 performance. Outgoing CEO Mike Corbatt commented:

“As a sign of the strength and durability of our diversified franchise, our revenues were flat to 2019, despite the massive economic impact of COVID-19.”

Of note also in the release, was the fact that Citi released $1.5 billion in credit losses. The company had set the money aside as a buffer against projected losses linked to the pandemic. To this build in perspective, Citi had built up reserves of $436 million in Q3 and a year earlier, had just $253 million in reserve.

Citi Loses Funds Transfer Case

This week, Citi has been in the news over the erroneous funds transfer made last year. Citi, acting on behalf of its client Revlon, which had gone into bankruptcy, was supposed to transfer $7.8 million in interest payments to Revlon’s creditors.

However, due to an error, the bank ended up transferring $900 million to its lenders, paying off all of the company’s debts. Citi swiftly addressed the error and petitioned the creditors to return the money.

While some of the creditors accepted the mistake and returned the funds, some refused and held onto the money. Citi consequently pursued legal action against these entities to secure the return of around $500 million.

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