NEW YORK, N.Y. – Citigroup said Thursday that its fourth-quarter profit dropped 86 per cent after incurring large legal and restructuring charges.
The bank earned $350 million, or 6 cents a share, for the three-month period ending in December, compared with a profit of $2.5 billion, or 0.77 cents a share, for the same period a year ago.
Revenue was flat at $17.78 billion.
The bank warned investors that it would incur charges of $3.5 billion in the fourth quarter to cover the costs associated with investigations into currency trading, the manipulation of a key interest rate, as well as anti-money laundering and related probes. Money was also set aside to cover costs associated with reducing the Citi’s headcount and cutting its real-estate holdings.
Like JPMorgan Chase and Bank of America, Citi also reported a drop in quarterly fixed-income trading revenue. Citi said that revenue in that part of its business fell to $2 billion in the period, a drop of 16 per cent from a year earlier, due to a “challenging” economic environment.
Financial markets were volatile in the final quarter of last year. There were big swings in bond and stock prices as investors worried about the outlook for global economic growth.
“When you get these sudden swings, people don’t know what to do and activity just stops,” John Gerspach, Citi’s chief financial officer, said on a call with reporters. “That’s what’s causing a lot of the volatile results that you’re seeing.”
Citi’s earnings fell short of analysts’ estimate of 10 cents a share, according to the financial data provider FactSet.
For the full year, Citi earned $7.3 billion, a drop of 47 per cent compared with earnings of $13.7 billion a year earlier.
Citi fell 99 cents, or 2 per cent, $48.10. The company’s stock is down 11.2 per cent this year.