Citi Q4 Earnings Beat On Low Expenses, Revenues Disappoint

Global Consumer Banking (GCB) revenues declined slightly year over year to $8.4 billion. Higher revenues in North and Latin America were offset by lower revenues in Asia GCB.

Corporate/Other revenues came in at $470 million, slipping 37% from the prior-year quarter. The decline mainly underscores legacy assets runoff.

Operating expenses at Citigroup dipped 4% year over year to $9.9 billion. Higher compensation costs, efficiency savings and the winding-down of legacy assets muted the elevated volume-related expenses and ongoing investments.

Strong Balance Sheet

At the end of the quarter, Citigroup’s end of period assets was $1.92 trillion, slightly down sequentially. The company’s loans grew 1% sequentially to $684 billion. Deposits increased 1% sequentially to $1.01 trillion.

Credit Quality Improves

Total non-accrual assets decreased 24% year over year to $3.6 billion. The company reported a dip of 17% in consumer non-accrual loans to $2.2 billion. In addition, corporate non-accrual loans of $1.3 billion plunged 32% from the year-earlier period.

Citigroup’s total allowance for loan losses was $12.3 billion at the end of the quarter, or 1.81% of total loans, compared with $12.4 billion, or 1.86%, recorded in the year-ago period.

Solid Capital Position

At the end of the Oct-Dec period, Citigroup’s Common Equity Tier 1 Capital ratio was 11.9%, down from 12.4% in the prior-year quarter. The company’s supplementary leverage ratio for the quarter came in at 6.4%, down from 6.7% in the year-earlier quarter.

As of Dec 31, 2018, book value per share was $75.05, up 6% year over year, and tangible book value per share was $63.79, up 6% from the comparable period last year.

Capital Deployment

During 2018, Citigroup repurchased about 212 million of common stock. The company returned around $18.4 billion to common shareholders as common stock repurchases and dividends.

Notably, during fourth-quarter 2018, the company bought back about 74 million of common stock and returned around $5.8 billion to common shareholders as common stock repurchases and dividends.

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