Earnings: Citigroup Q3 profits plunge 86% as legal costs rise to $3.5 bn

New York: Citigroup today became the latest big US bank to report disappointing results, with earnings plunging 86 percent on a large legal charge and disappointing operating performance in some segments. Earnings for the fourth quarter were $350 million, down from $2.5 billion a year earlier. The biggest drag came from a previously announced $3.5 billion charge for legal costs and corporate repositioning. Like other banks, Citi has faced numerous government and private litigation allegations that it conspired with its competitors to rig interest rates and foreign-exchange trades. Large legal charges also weighed on annual net income, which fell 46.5 percent from last year to $7.3 billion. Legal and repositioning expenses for the year were $7.4 billion, up from $3.6 billion in 2013. Citi chief executive Michael Corbat said 2014 results overall “fell short of our expectations,” but that the company made progress simplifying its corporate structure, removing unnecessary risk and cutting expenses. The big US bank also faced tough questions in 2014 after the Federal Reserve rejected its plan for shareholder distributions and after it disclosed a large fraud case involving its Mexican subsidiary. Citi chief financial officer John Gerspach told an analyst conference call that 2014 was a “noisy” year but that the headline news “masks some of the progress we made.” Citi in October announced it would exit 11 international consumer banking markets with weak profit prospects. Global staff stood at 241,000 at the end of the year, down 10,000 from at the close of 2013. Earnings in Citi’s global consumer banking segment rose eight percent to $1.7 billion, thanks in part to higher revenues in North America, where average loans rose 10 percent and there was a one per cent gain in average deposits. Revenues fell in global consumer banking in international segments, but part of that was due to the strong dollar. Revenues dropped two per cent in Asia, but rose one percent in constant dollars. AFP