The Banking and Strategy Initiative

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Bank Results Season: Citi Doubles Profits to $13.9 Bln in 2013

From Mike Corbat’s self propelled operational restructuring of the business, Mike’s achievements include in his own words, 15% increase in Operational Income, core loans were up by 7%, $2.4 B more in DTA ( profits saved from previous losses) the nip from DVA and the Credicard Brazil sale was negligible but the earlier results were down $1 B on repositioning charges (pre tax). Also the bank will likely need to shout again about the remaining $117 B which might even be extinguished completely in the year, as Mike counts a 50% reduction in losses on that folio. Apparently we missed a tax audit line in the prior quarter as well that brough $580 mln last year and $ % bln in losses on sold investments that contribute to the return to profits this year at a full clip, And Expenses still improved by 6%

Though profits (Net Income) doubled, Revenue was slower aided only by the revival in Core Loans.

Loans and Assets grew to $968 B and $575 B for the year. If you thought BofA was doing poorly with Loan Loass reserves and NCO, Citi is a tad worse on both counts at 2.97% or $19.7 B on Loan Loss provisions.

North America Retail revenues declined 8% to $4.9 Bln on lower refi volumes. Fixed Income revenues of $23.3 Bln a 15% decrease after an early promise shown in previous quarters in 2013

RoE for the year was a bare 7.1% and Q4 was a still poor 6.4% as Tier I Basel Ramped up to 10.5% . Top Line going forward also includes the bump from Citi Holdings worth $4.5 Bln in 2013

The most heartening thing for Citi’s 2013 is that a $43 B NII topline is still more or less intact while Fees and Non Interest Income , still a lower factor with a 50% International footprint, is up 10%, the NII thus accounting for more of the yield than at other US banks

The bank’s been waylaid however in its earlier hurry in GCB as it remains at a third of the other three leading banks in Average GCB Loans and two thirds of their Deposits. It could probably still revive its growth clip in deposits with excellent investments in user technology and a momentum carried forward from the last decade esp in the Domestic US markets

 

 

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This entry was posted on January 16, 2014 by in Banking, Financial Markets, US and tagged , , , , , , , .

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