Citigroup’s Earnings Disappoint, Wells Fargo’s Shines

NEW YORK—Citigroup Inc., the nation’s third-biggest bank by assets, reported disappointing fourth quarter earnings on Tuesday, sending its shares lower on the New York Stock Exchange.

The New York-based company said that fourth quarter profits were $1.17 billion, an 11 percent decline from the same period last year. Earnings of 38 cents per share were also lower than last year’s 43 cents per share.

Like other banks, Citigroup suffered from a volatile investment banking environment, especially due to the ongoing sovereign debt crisis playing out in the Eurozone. Offsetting the lower revenues in investment banking was a growing consumer business, as Citigroup’s credit card portfolio improved. Americans have increased their savings, and credit card delinquencies of more than 90 days declined by 30 percent from last year.

Citigroup, being the most international of all the major U.S. banks, benefited from a 14 percent growth in its business and consumer loans, mostly due to better performance in Asia and Latin America. However, its international profits were tempered by unfavorable foreign exchange rate movements, particularly for profits made in Brazil and Mexico.

“Clearly, the macro environment has impacted the capital markets and we will continue to right-size our businesses to match the environment,” said CEO Vikram Pandit, 55, in a statement. “We are increasingly focused on driving earnings through our core franchise and beginning to return capital to our shareholders this year.” By its own admission, Citigroup reduced its risk in the fourth quarter due to the economic environment, according to comments by Chief Financial Officer John Gerspach in a conference call with analysts. 

Wells Fargo’s Performance Improves

Wells Fargo, the nation’s No. 4 bank, reported better-than-expected fourth quarter earnings on Tuesday, sending its shares higher.

The San Francisco-based bank said that earnings per share were 73 cents, a 20 percent growth, mainly due to a more profitable lending business and increased customer deposits. The company said that average customer deposits increased by 9 percent, including a 3.2 percent increased in checking account balances and a 12 percent increase in savings account balances, reflecting an ongoing trend of more savings by consumers.

In a trend prevailing in the industry, consumers seemed to have a renewed focus on paying bills on time. The bank wrote off 33 percent less in bad debt from loans in the latest quarter, compared to a year ago.