Citigroup’s Adjusted Earnings Top Expectations. But the Stock Is Falling.

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Citigroup shares were down more than 2% in early trading Friday.

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Photo by Jewel Samad / AFP via Getty Images

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Citigroup stock was falling on Friday after the bank posted a mixed bag of fourth-quarter earnings.

Citigroup (ticker: C) reported net income of $3.2 billion, down 26% from a year ago. The bank attributed the decline to an increase in expenses, which rose 18% in the quarter to $13.5 billion.

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But adjusted earnings of $1.99 per share and $17 billion in revenue were above expectations of $1.71 on $16.85 billion in revenue.

Citigroup shares closed down more than 2% at $66.39 on Friday.

Revenue from fixed-income and equity market trading was $2.5 billion and $785 million, respectively, in the quarter. Both were below analysts’ expectations of $2.83 billion and $866.7 million.

Citigroup CEO Jane Fraser said in a statement that the bank had “a good end to 2021, net income of up to $22 billion in a far better credit environment than the previous year.”

Investors will be waiting to learn more about Citigroup’s plan to exit retail banking in 13 markets in Asia and Europe as part of a strategic refresh during the earnings call later this morning.

The bank announced that United Overseas Bank of Singapore is buying out its consumer-banking businesses in Indonesia, Malaysia, Thailand and Vietnam. Earlier this week, Citigroup announced its intention to exit its Mexico consumer, small-business and mid-market banking operations. However, a detailed road map may not come until its March Investor Day.

This will be the first major opportunity for Fraser to set some goals and frame some of the narrative, explained Morningstar analyst Eric Compton. baron’s, He will keep an eye on expenditure growth projections and if the bank expects 2022 revenues to remain flat.

Barclays analyst Jason Goldberg’s initial outlook for Citigroup in 2022 includes “improving net interest income, lower fee income and increased expenses, which could result in negative operating profit in the near-term.”

Shares of Citigroup have fallen 2.1% over the past four quarters, but have gained 9.6% in prices this year. One factor is the impending rise in interest rates, which boosted the stocks of most large-cap banks. Bank of America (BAC) was up 7.1%, while the KBW Nasdaq Bank Index is up 10% this year.

Citigroup was not the only bank that reported earnings on Friday. JPMorgan Chase (JPM) and Wells Fargo (WFC) both reported earnings that beat expectations. Goldman Sachs Group (GS) reports next Tuesday.

Investors got a preview on Wednesday when Jefferies Financial Group (JEF) posted a mixed bag of earnings with fixed-income trading levels, but the investment banking division was delivering record revenue. The stock lost 9.2%.

Write to Karishma Vanjani at [email protected]

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