Citigroup reported fourth-quarter earnings on Thursday that failed to live up to Wall Street’s expectations, as trading revenues faltered.
The bank said that its quarterly net income was up sharply from a year ago to $2.7 billion, or 85 cents a share, while its revenue fell slightly to $17.8 billion.
But after factoring in accounting adjustments, Citigroup’s earnings were slightly lower at $2.6 billion, or 82 cents a shares. Wall Street analysts had been expecting earnings of 95 cents a share on $18.2 billion in revenue.
At the center of the bank’s fourth-quarter miss was the relatively poor performance of the company’s fixed-income trading business. In the third quarter, disappointing trading results also weighed on Citigroup’s earnings.
The trading problems at the bank look particularly stark in the fourth quarter compared with results from JPMorgan Chase and Bank of America earlier this week.
Citigroup’s trading and banking business was down $200 million to $4.6 billion from a year earlier, with particular weakness coming from its fixed-income trading desks.
The earnings miss comes at a critical time for Citigroup’s chief executive, Michael L. Corbat, who is only about 15 months into his job at the helm of the nation’s third-largest bank by assets.
“Although we didn’t finish the year as strongly as we would have liked, we made substantial progress toward our key priorities in 2013,’’ Mr. Corbat said in a statement.
Shares of Citigroup were lower in premarket trading.
Large banks like Citigroup are increasingly dependent on revenues from trading and investment banking, as consumer lending remains sluggish in a weak economy. Citigroup’s consumer banking revenue fell $346 million, to $9.4 billion. Like its rivals, Citigroup cited a drop in mortgage refinancing activity as weighing on its consumer lending.
Analysts had hoped that Citi’s vast international businesses units could help offset losses in its U.S. units. But even solid growth in Latin America wasn’t enough to pick up all of the slack.
Bank of America’s better-than-expected earnings on Wednesday had helped spark a broad rally in financial shares, as investors cheered signs that the once battered sector was still on the mend.
Citigroup’s miss shows how fickle the banking business remains at a time of tepid economic growth.
