US banks

Citigroup cuts 20,000 employees after quarterly red. Jp Morgan slashes year-end

September to December losses of USD 1.8 billion

by Finance Review

12 January 2024

Aggiungi Il Sole 24 Ore
ai preferiti su Google

2' min read

Key points

Numbers
Jp Morgan brakes (but exceeds estimates)
Dimon's caution on rates and inflation

2' min read

Citigroup ended the fourth quarter with losses of $1.8 billion while revenues fell 3% to $17.4 billion, in what is the worst three months for the bank in 15 years. 2023 ended with a profit of 9.2 billion, down 38% from 14.8 billion in 2022.

In announcing the results Citigroup planned a cut of 20,000 jobs in the medium term. "The fourth quarter was very disappointing. Considering how far we have come in terms of simplification, 2024 will be the breakthrough year," said CEO Jane Fraser.

The cut of 20,000 positions is expected to save the group up to USD 2.5 billion; in the meantime, however, the company expects to incur up to USD 1 billion in expenses related to severance payments and Fraser's broader overhaul of the bank.

The numbers

Citigroup ended the fourth quarter of 2023 with a loss, compared to profit in the same period a year earlier, mainly due to lower revenues, a number of extraordinary charges and an increase in expenses and credit costs. In the three months to December, the New York-based bank reported a 'red' of $1.839 billion, or $1.16 per share, compared to earnings of $2.51 billion, or $1.16 per share, in the same period last year. Revenues fell by 3% to $17.44 billion. Excluding extraordinary items, adjusted earnings were $0.84 per share. Analysts had expected average earnings of $0.79 and revenues of $18.75 billion. For the full year, Citigroup saw net income fall 38% to $9.228 billion, while sales rose 4% to $78.46 billion.

Jp Morgan brakes (but exceeds estimates)

JPMorgan Chase ended the fourth quarter with profits down, due to charges related to the bailout of regional banks, but higher than estimates excluding extraordinary items. In the three months to December, the New York-based banking giant reported earnings of $9.307 billion, $3.04 per share, compared to $11 billion, $3.57 per share, in the same period a year earlier. Excluding extraordinary items, earnings per share were $3.97, compared to analysts' average estimates of $3.36. Reported revenues rose 12% to 38.574 billion, while managed revenues rose 12% to 39.943 billion. For the full year, net profit rose 32% to $49.552 billion, while total revenue rose 23% to $158.104 billion.

"We closed a solid quarter" and "the record 2023 results reflect over-earnings on both net interest income and credit. We remain confident in our ability to continue to generate very solid returns even after pricing normalisation," said CEO Jamie Dimon.

Dimon's caution on rates and inflation

Commenting more generally on the environment in which the bank operates, the CEO noted that 'the US economy continues to be resilient, consumers continue to spend, and markets expect a soft landing. Importantly, the economy is supported by large government deficit spending and past stimulus'. In addition, 'inflation could be more persistent and rates higher than the market expects,' Dimon said, explaining that for all these reasons 'we need to remain cautious', especially as 'conflicts in Ukraine and the Middle East have the potential to cause turbulence in energy and food markets, military and economic relations, and human cost.