Citi Shares Drop As Quarterly Profits Fall Significantly Short of Estimates.

[ by Melanie Gretchen ]

Citigroup, like Bank of America, continues to struggle under the weight of mortgages written prior to and during the credit crisis.  Despite persistent efforts to cut its costs and unload troubled assets, the bank reported Q4 earnings that can best be described as "disappointing."   The bank reported quarterly earnings of $1.2 billion, or 38¢ a share - compared with 96¢ a share that analysts expected.

In the 4th quarter, Citi took charges of $1.3 billion for legal costs and related expenses.  Excluding those one-time items, Citi's Q4 earnings came in at 69¢ a share - also significantly below analyst expectations.

The New York-based bank faces further... pressure from shareholders to raise its returns.  To that end, Citi has been working through its piles of soured loans, unloading less-profitable non-core business lines, and reducing broad-based costs throughout the organization.  In December, the bank announced plans to eliminate 11,000 jobs worldwide.

On the upside... the bank has begun realizing its potential in developing countries, where growth prospects appear stronger than in the U.S.  For the 4th quarter, the global consumer bank group's revenue increased 4%, to $4.9 billion, as compared to the 3% rise in revenues for North America, to $5.3 billion.

The securities and investment banking group contributed to the bottom line, by generating $629 million in net income;  for the same period one year earlier, that group had a loss of $158 million.

"Our bottom line earnings reflect an environment that remains challenging.  It will take some time to work through the challenges of the current environment but realizing our core earnings potential, as well as improving our returns on assets and tangible equity, are critical goals going forward." -- Michael Corbat, CEO, in a statement.

For further details, go to [Dealbook, 1/17/13].