Citigroup’s first-quarter profit dipped as it allocated more funds for employee severance packages and replenished a government deposit insurance fund.
The bank reported a net income of $3.4 billion, or $1.58 per share, for the quarter ending March 31, down from $4.6 billion, or $2.19 per share, a year earlier.
CEO Jane Fraser noted the completion of the organizational simplification announced in September, resulting in a streamlined management structure aligning with the bank’s strategy.
Citi anticipates a reduction in headcount by 7,000 and annualized savings of $1.5 billion from the reorganization.
Additionally, the bank contributed $251 million to the Federal Deposit Insurance Corp (FDIC) fund, which faced depletion after the failures of three regional lenders last year.
Revenue decreased by 2% to $21.1 billion in the first quarter, with an outlook of $80 billion to $81 billion for 2024, representing a 1.8% to 3% increase from 2023.
Notably, Citi’s services and banking divisions saw positive performance. Revenue from cash management, clearing, and payments services for corporations rose by 8%, while banking revenue surged by 49%, fueled by capital markets and investment banking fees.
However, trading revenue declined by 7%, and wealth management revenue contracted by 4%.
While consumer banking revenue grew, the bank increased provisions for potential loan defaults, resulting in credit costs of $2.2 billion, primarily due to non-conforming loans.
Citi’s forecast for the year includes expenses of $53.5 billion to $53.8 billion, excluding special assessment fees from the FDIC, with repositioning costs and restructuring charges expected to range from $700 million to $1 billion.
CEO Fraser initiated a comprehensive reorganization in September to enhance performance, resulting in higher expenses of $14.2 billion.
Despite challenges such as regulatory issues and workforce concerns, investors have shown confidence in Fraser’s leadership, reflected in the bank’s 18% stock price increase this year.
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