The US bank reported declines in net income and noted that its quarterly figures included divestiture-related effects. On its revenue side, higher interest rates and loan growth aided net interest income.
Citigroup reported net income for the fourth quarter 2022 of $2.5 billion, or $1.16 per diluted share, on revenues of $18.0 billion. Those figures were down from net income of $3.2 billion, or $1.46 per diluted share, on revenues of $17.0 billion for the fourth quarter 2021.
The US-listed banking group said its Q4 figures included divestiture-related impacts of approximately $192 million in earnings before taxes (about $113 million after tax), primarily driven by a gain on the sale of the Thailand consumer business. Excluding these divestiture-related impacts, earnings per share was $1.10.
This compares with divestiture-related impacts in the fourth quarter 2021 of about $1.2 billion in earnings before taxes (approximately $1.1 billion after tax), primarily driven by costs related to the South Korea voluntary early retirement programme.
Revenues rose by 6 per cent from the prior-year
The higher net interest income was driven by the impact of higher interest rates across businesses and strong loan growth in personal banking and wealth management (PBWM). The lower non-interest revenues reflected declines in investment banking in institutional clients group (ICG) and lower investment product revenues in global wealth management in PBWM, the firm said.
Citigroup's cost of credit was about $1.8 billion in the fourth quarter 2022, compared with a negative figure of $500 million a year earlier, reflecting a net build in the allowance for credit losses (ACL) for loans and unfunded commitments of $640 million, it said.
For the full year 2022, Citigroup reported net income of $14.8 billion on revenues of $75.3 billion, compared with net income of $22.0 billion on revenues of $71.9 billion for the full year 2021.
Under the leadership of CEO Jane Fraser, the US bank has been offloading 14 retail banking businesses around the world as part of an attempt to streamline the business and pivot towards higher-yielding areas such as wealth management.
“One of our major goals in 2022 was to put in place a strategic plan designed to create long-term value for our shareholders and I am pleased with the significant progress we have already made in terms of our transformation, simplification and strengthening our five interconnected businesses, some of which delivered excellent results this quarter,” Fraser said in a statement on Friday.
Personal banking and wealth management
PBWM revenues, at $6.1 billion, rose 5 per cent in Q4 2022 from a year before as net interest income growth, driven by strong loan growth across US personal banking and higher interest rates, was partially offset by a decline in non-interest revenue, driven by the lower investment product revenues in global wealth management and higher partner payments in retail services.
Global Wealth Management revenues were $1.7 billion, falling 6 per cent as investment product revenue headwinds more than offset net interest income growth from the higher interest rates, particularly in Asia. Excluding Asia, revenues were largely unchanged.
PBWM operating costs of $4.3 billion increased by 7 per cent, primarily driven by transformation investments and other risk and control initiatives.
Within the private bank, revenues were $589 million in Q4, down from $688 million a year before. For all of 2022, revenues were $2.762 billion, falling 6 per cent on a year earlier.