Citigroup Inc. said Tuesday that it lost $18.3 billion in the fourth quarter, its earnings wiped out by a $22 billion charge related to the new tax law.
While the law is expected to help Citigroup and other large U.S. banks over time, it is obscuring this quarter for many with large one-time costs. At Citigroup, that led to the largest quarterly loss ever, which amounted to $7.15 per share.
The tax law also dampened the results of JPMorgan Chase & Co. when it reported last week and is expected to hurt other banks in the fourth quarter as well. But its effect will be deeper at Citigroup, whose tax-related charges are expected to be among the largest of any U.S. company this quarter.
Without the tax charge, the bank would have made $1.28 per share, beating the $1.19 expected by analysts polled by Thomson Reuters. In the quarter that ended a year ago, the bank earned $3.57 billion, or $1.14 per share.
Revenue rose to $17.26 billion from $17.01 billion a year ago.
The bank run by Chief Executive Michael Corbat already had warned Wall Street about the impact of the tax law and the looming loss, saying last month that it expected to take a hit of about $20 billion to profits this quarter. That was before the tax law was completed.
The $22 billion tax hit reported Tuesday comes mostly from writing down the bank's huge pile of deferred-tax assets. Those are past tax credits and deductions that companies can use to defray future tax bills. Citigroup still has a net of about $45.5 billion in deferred-tax assets that it is working through. That is more than other banks because Citigroup generated huge losses in the financial crisis.
A smaller amount of the tax charge came from the newly enacted, one-time charge on U.S. companies' overseas earnings. Citigroup is more focused on overseas markets than some of its peers.
Longer term, the tax changes are expected to create a windfall for Citigroup and other banks by slashing the overall corporate tax rate to 21% from 35%.
Write to Christina Rexrode at firstname.lastname@example.org
(END) Dow Jones Newswires
January 16, 2018 08:20 ET (13:20 GMT)