Citigroup (NYSE:C) revealed strong fourth-quarter profit growth on Thursday thanks to cost cutting and credit improvements, but the banking conglomerate’s results failed to meet Wall Street’s expectations.
Shares of the No. 3 U.S. bank by assets lost ground in premarket trading on the earnings miss, falling about 3%.
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Citi said it earned $2.69 billion, or 85 cents a share, last quarter, compared with a profit of $1.2 billion, or 38 cents a share, a year earlier. The year-earlier period was hurt by legal and restructuring charges of about $2.3 billion.
Excluding one-time items, Citi earned 82 cents a share, up from 69 cents the year before. But analysts had been modeling for EPS of 85 cents.
Revenue dipped 0.8% to $17.78 billion. On an adjusted basis, revenue fell 2.5% to $17.94 billion, trailing the Street’s view of $18.18 billion.
“Although we didn't finish the year as strongly as we would have liked, we made substantial progress toward our key priorities in 2013,” Citi CEO Michael Corbat said in a statement.
For the year, Citi grew operating income 15% to the highest level since before the financial crisis that nearly knocked the bank out of business.
Cost-cutting moves helped drive Citi’s profits higher in the fourth quarter as expenses tumbled 13% year-over-year to $11.93 billion. Legal and related expenses fell to $809 million from $1.3 billion the year before.
Like most big banks, Citi also benefited from the stronger U.S. economy and credit conditions. The bank said fourth quarter net credit losses declined 15% year-over-year to $2.5 billion.
But Citi’s results were hurt by its fixed income business, which suffered a 16% drop in revenue to $2.3 billion. The bank cited a “more challenging” trading environment and the loss of strong revenue from its Citi Capital Advisors business, which is being wound down.
Citi also continues to unwind its noncore assets being held in Citi Holdings, which Corbat used to run. Assets in this division shrank by 25% from the year before and now represent just 6% of total Citi assets.
Shares of New York-based Citi fell 2.73% to $53.49 ahead of Thursday’s opening bell.