Citigroup, which reported a $1.8 billion quarterly loss owing to one-time costs, announced on Friday that it would cut 20,000 jobs over the next two years according to citi layoffs.
The bank’s stock slid more than 1% after years of struggles to reduce expenses, increase profits, and improve its underperforming stock.
Analysts were informed by CEO Jane Fraser that “the fourth quarter was clearly disappointing.” We recognize the importance of 2024.”
According to Chief Financial Officer Mark Mason, as part of a larger reorganization, the lender would reduce its 239,000 global personnel by 20,000 by 2026, including the citi layoffs.
When the bank folds and lists its Mexican consumer unit Banamex in its final initial public offering, it also anticipates losing 40,000 jobs. Mason stated that, taking into account the manpower reduction and Banamex’s separation, the objective is to attain a workforce level of 180,000 personnel.
When a one-time charge was taken out of the equation, analysts observed that the third-largest U.S. lender by assets showed solid performance.
Citigroup’s Earnings.
“Citigroup’s earnings looked dreadful with a $1.8 billion loss, but there was resilience in the bank’s underlying business,” stated Octavio Marenzi, CEO of management consulting firm Opimas.
At $17.4 billion, Citigroup’s revenue decreased 3% from the previous year. The bank had previously maintained its five divisions under broad divisions: services, markets, banking, U.S. personal banking, and wealth; this was the first time the divisions’ earnings have been revealed.
This loss was caused by claims totaling $3.8 billion, which were revealed in a filing on Wednesday. These claims included payments of $1.7 billion for replenishing reserves and government deposit insurance funds, as well as restructuring expenses and currency devaluations in Argentina and Russia.
Regarding this year, the bank anticipates reporting a charge of between $700 million and $1 billion for restructuring and severance costs. According to Mason, “Whenever an industry or company goes through this kind of reduction, it is tough for morale.” The cutbacks won’t affect revenue growth, he continued.
Markets revenue, or the trading division’s revenue, decreased 19% to $3.4 billion from the previous year. A quarter of the revenue was lost due to losses from Argentina and some income from currency markets and fixed rates.
Competitors Bank of America and JPMorgan Chase revealed lower quarterly profits on Friday, but Wells Fargo outperformed them in terms of cost reduction.
On the other hand, greater investment banking fees for the capital markets and consulting sector drove a 22% increase in banking revenue to $949 million, offsetting a fall in corporate loans.
Retail banking and credit cards contributed to a 12% increase in income to $4.9 billion in US personal banking.
But when stress levels among consumers rise, Citigroup will need to put aside more money to pay for bad loans.
Research director Chris Marinac of Janney Montgomery Scott stated, “It took a while to complete the restructuring that was announced two months ago. Now, the question is: Will they be able to carry out this restructure while still expanding the main business? The verdict is not in yet.”