We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Citigroup's (C) Reserves & Charges of $3.78B to Hurt Q4 Results
Read MoreHide Full Article
Citigroup Inc. (C - Free Report) disclosed certain items impacting its pre-tax fourth-quarter 2023 results to enhance transparency. Citigroup recorded combined charges and reserves of $3.78 billion, which is expected to affect its fourth-quarter earnings.
C added $1.3 billion to its reserves to protect itself against risk exposures in Argentina and Russia. The currency devaluation and geopolitical risks in Argentina are likely to have affected its ability to sustain external debt service. C, therefore, set aside $720 million to combat the situation. Also, Citigroup booked $580 in reserves, given the prolonged political and economic instability in Russia.
C recorded a charge of approximately $1.7 billion to its operating expenses relating to the Federal Deposit Insurance Corporation (FDIC) special assessment. Management had earlier estimated this to be $1.65 billion.
The fourth-quarter results of other major banks, including JPMorgan Chase & Co. (JPM - Free Report) and Bank of America Corporation (BAC - Free Report) , will likely be weighed down by similar FDIC special assessment fees to cover the losses to FDIC’s insurance fund from failed banks. Notably, JPM and BAC are expected to pay approximately $3 billion and $1.9 billion, respectively, in special assessment fees.
Pursuant to its implementation of the organization simplification initiative, Citigroup’s expense base included around $780 million in restructuring charges in fourth-quarter 2023. This involved severance costs, non-cash asset impairments and other related charges.
Management has been on track to make changes to its financial reporting structure effective for its fourth-quarter 2023 results. The new organizational structure will replace the existing reportable segment with five new reportable operating segments, namely Services, Markets, Banking, Wealth and U.S. Personal Banking. Further, the remaining activities will be clubbed under a separate All Other segment consisting of Legacy Franchises and Corporate/Other units.
Also, the leaders of each of Citigroup’s five main businesses will report directly to the chief executive officer and be members of the Executive Management team. These new segments will operate across two regions, comprising North America and an international group. Such optimization of management layers and reduction in functional roles will drive accountability and make the decision-making process swifter.
Apart from the stated charges and reserve creation during the fourth quarter, Citigroup’s results have also been affected by the devaluation of the Argentine peso in December 2023. Hence, the company recorded approximately $880 million of translation loss in revenues in Argentina. This is partially offset by net interest income of around $250 million earned on its net investments in the country.
Progressing with its global consumer banking exits and organizational overhaul, C is likely to face challenging results this earnings season. Nonetheless, such efforts are expected to better its long-term performance by focusing on profitable businesses and eliminating extra management layers.
Citigroup’s shares have gained 27.7% in the past three months compared with the industry’s 23.1% growth.
Image: Bigstock
Citigroup's (C) Reserves & Charges of $3.78B to Hurt Q4 Results
Citigroup Inc. (C - Free Report) disclosed certain items impacting its pre-tax fourth-quarter 2023 results to enhance transparency. Citigroup recorded combined charges and reserves of $3.78 billion, which is expected to affect its fourth-quarter earnings.
C added $1.3 billion to its reserves to protect itself against risk exposures in Argentina and Russia. The currency devaluation and geopolitical risks in Argentina are likely to have affected its ability to sustain external debt service. C, therefore, set aside $720 million to combat the situation. Also, Citigroup booked $580 in reserves, given the prolonged political and economic instability in Russia.
C recorded a charge of approximately $1.7 billion to its operating expenses relating to the Federal Deposit Insurance Corporation (FDIC) special assessment. Management had earlier estimated this to be $1.65 billion.
The fourth-quarter results of other major banks, including JPMorgan Chase & Co. (JPM - Free Report) and Bank of America Corporation (BAC - Free Report) , will likely be weighed down by similar FDIC special assessment fees to cover the losses to FDIC’s insurance fund from failed banks. Notably, JPM and BAC are expected to pay approximately $3 billion and $1.9 billion, respectively, in special assessment fees.
Pursuant to its implementation of the organization simplification initiative, Citigroup’s expense base included around $780 million in restructuring charges in fourth-quarter 2023. This involved severance costs, non-cash asset impairments and other related charges.
Management has been on track to make changes to its financial reporting structure effective for its fourth-quarter 2023 results. The new organizational structure will replace the existing reportable segment with five new reportable operating segments, namely Services, Markets, Banking, Wealth and U.S. Personal Banking. Further, the remaining activities will be clubbed under a separate All Other segment consisting of Legacy Franchises and Corporate/Other units.
Also, the leaders of each of Citigroup’s five main businesses will report directly to the chief executive officer and be members of the Executive Management team. These new segments will operate across two regions, comprising North America and an international group. Such optimization of management layers and reduction in functional roles will drive accountability and make the decision-making process swifter.
Apart from the stated charges and reserve creation during the fourth quarter, Citigroup’s results have also been affected by the devaluation of the Argentine peso in December 2023. Hence, the company recorded approximately $880 million of translation loss in revenues in Argentina. This is partially offset by net interest income of around $250 million earned on its net investments in the country.
Progressing with its global consumer banking exits and organizational overhaul, C is likely to face challenging results this earnings season. Nonetheless, such efforts are expected to better its long-term performance by focusing on profitable businesses and eliminating extra management layers.
Citigroup’s shares have gained 27.7% in the past three months compared with the industry’s 23.1% growth.
Image Source: Zacks Investment Research
C presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.