Citigroup Inc Q4 2017 Earnings Struck By Massive Tax Charge

Citigroup earnings top expectations, excluding $19 billion charge for tax law changes

Net losses for the final quarter of 2017 were $18.3 billion, or $7.15 per share, due to a $22 billion charge stemming from re-measurement of tax-deferred assets under the new tax law and repatriation of foreign earnings, the company said in a statement. Citigroup also took at one-time, non-cash charge of about $22 billion for the quarter.

Citigroup's cost of credit rose 16 percent from a year ago to $2.08 billion, driven by an increase in net credit losses of $184 million as well as a higher loan loss reserve build. But its effect will be deeper at Citigroup, whose tax-related charges are expected to be among the largest of any USA company this quarter. Excluding the impact of the new tax law, net income totaled $3.7 billion, an increase of 4% from the prior year period. Revenue for consumer banking rose 6 percent in the fourth quarter, to $8.4 billion, and revenue in investment and corporate banking fell 1 percent, to just over $8 billion.

The $22 billion tax hit reported Tuesday comes mostly from writing down the bank's huge pile of deferred-tax assets.

Citigroup, the fourth-largest USA bank by assets, said it expects to benefit in future quarters from the new tax law as its tax rate falls to about 25 percent in 2018 from 30 percent in 2017. Separately, deposits were $960 billion as of quarter end, up 3%.

About $3 billion of the $22 billion tax charge came from the newly enacted, one-time charge on USA companies' overseas earnings.

The firm returned $6.3 billion in capital to shareholders during the fourth quarter and $17.1 billion in all of 2017. Analysts expected revenue of $17.22 billion. In the same period of previous year, the bank said it had EPS of $1.14 and $17.01 billion in revenue. That was in line with what Chief Financial Officer John Gerspach predicted last month, when he said year-over-year trading revenue would be down by a high-teens percentage.

Quarterly profit at the consumer bank rose 9%, driven by the Asia business.

Institutional Clients Group revenues of $8.10 billion, down 1%.

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%.

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