Citigroup's profit jumped in the fourth quarter but fell short of… (Matt Rourke / Associated…)
NEW YORK -- Citigroup Inc.'s profit jumped in the fourth quarter but fell short of Wall Street hopes for a stronger turnaround for the New York-based financial giant.
Citi said it earned $2.7 billion, or 85 cents a share, in the last quarter, up from $1.2 billion, or 38 cents, from the same period the prior year.
Wall Street analysts had expected Citi to earn 95 cents a share in the fourth quarter, according to Thomson Reuters.
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Citi's stock slumped in early trading on Thursday. The bank's shares fell $1.79, or 3.3%, to $53.20.
Under Michael Corbat, the bank's chief executive for little over a year, Citi has slashed expenses and taken aim at toxic investments that continue to drag down its earnings five years after the financial crisis.
Revenue for the last quarter fell 1% to $17.8 billion, while expenses dropped 13% to $11.9 billion.
Legal costs for the quarter were $809 million, down sharply from $1.3 billion in the fourth quarter of 2012.
The bank reported modest gains in investment banking, but its bond trading business continued to slump amid a "challenging" environment.
Corbat expressed some disappointment but was otherwise upbeat about the bank's efforts to turn itself around. He noted the bank was able to halve the annual loss of Citi Holdings, its repository for troubled mortgage investments.
“Although we didn’t finish the year as strongly as we would have liked, we made substantial progress toward our key priorities in 2013," Corbat said. "We enter 2014 as a strong and stable institution that is committed to achieving our 2015 financial targets and our objective of returning capital to our shareholders.”
Citi reported 7% quarterly rise in loans to consumers and corporate clients. Its growth in consumer loans reflected the acquisition of Best Buy's credit card portfolio in the third quarter.
But its global consumer banking unit saw a 5% decline in revenue amid a sharp industry-wide slowdown mortgage refinancing as interest rates rise.
Other major banks that reported earnings this week -- JPMorgan Chase & Co., Wells Fargo & Co. and Bank of America Corp. -- also disclosed steep drops in their mortgage businesses.
And like other major banks, Citi's bottom line was lifted by improving credit quality of borrowers that allowed the firm to release reserves set aside for bad loans. The bank released $670 million in loan-loss reserves in the last quarter, compared with $91 million the same period a year ago.
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