Legal expenses drag down Citigroup's Q4
By Daniel Wagner, APCitigroup's fourth quarter earnings fell short of Wall Street's expectations as the bank's legal expenses rose and it released less money from its loan-loss reserves.
January 18, 2013, 12:23 am TWN
The bank, based in New York, said a big chunk of the legal expenses came from a settlement reached last week over illegal foreclosure practices in the aftermath of the housing bust.
Citi earned US$1.16 billion after paying preferred dividends, or 38 cents per share, in the three months ended Dec. 31. That compares with US$933 million, or 31 cents per share, in the same period a year earlier.
Excluding one-time costs related to restructuring and accounting for outstanding debt, the bank earned 69 cents per share. That's well below the 97 cents per share analysts polled by FactSet were expecting.
Revenue rose to US$18.7 billion, up 8 percent from the same period a year earlier and slightly below forecasts.
The bank had US$1.3 billion in legal and related expenses in the quarter. A big part of the legal expense was a settlement with federal regulators announced last week related to Citigroup's foreclosure practices. It took a charge of US$305 million in the quarter to cover its agreement with the Office of the Comptroller of the Currency and the Federal Reserve.