Citigroup on Friday reported a 27% drop in net income but earnings and revenue beat analysts’ expectations.
The bank has been restructuring to focus on more profitable businesses. The decline in profits, to $3.5 billion from $4.8 billion a year earlier, came as Citi has set aside more cash to cover losses on energy loans and as restructuring costs have increased.
But Citi’s earnings-per-share of $1.10 and revenue of $17.6 billion exceeded Wall Street estimates of $1.03 and $17.5 billion. In trading Friday, the stock was almost unchanged at $44.97.
“While our market-sensitive products clearly suffered from weak investor sentiment during the quarter, we continued to make progress in several key areas,” Citi’s chief executive Michael Corbat said in a news release.
He cited growth in loans and deposits in core businesses and reduced expenses while absorbing a $491 million repositioning charge as the company sells assets and exits less profitable markets.
Overall, the bank cut 14,000 jobs, or 6%, and 114 branches, or 4%, compared with a year ago. Expenses were down 3%.
As The Wall Street Journal reports, Citigroup had already tempered expectations for the quarter, warning that its markets businesses would be weak compared with last year. Revenue from fixed income markets dropped by 11.5% to $3.09 billion, while investment banking revenue plunged by 27.2% to $875 million.
Like Citi, JPMorgan Chase and Bank of America have also set aside cash to cover bad loans to the energy sector in the first quarter.
“The global banking industry has struggled since the start of year due to uncertainty surrounding the world’s economic outlook, with a slowdown in China and the continued fall of oil prices,” the BBC noted.
In a conference call, Citi’s CFO John Gerspach told reporters the bank is on the right track for the long term. “We obviously are disappointed in the overall performance of this quarter,” he said, but “we’re making the right investments.”
Gerspach acknowledged that the stock-trading business hadn’t met the bank’s expectations. “This is a little bit of a step backward,” he said, but “I don’t think you can measure success from one quarter.”